On September 28, 2025, Miami found itself in an unwelcome spotlight as the Union Bank of Switzerland (UBS) released its Global Real Estate Bubble Index, ranking the Florida city as having the highest real estate bubble risk in the world. Among 20 major cities surveyed worldwide, Miami not only topped the list, but did so with a score of 1.73—well above the threshold of 1.5 that UBS considers to be 'high risk.' As the city’s sunlit skyline continues to attract new residents and investors, the report signals that Miami’s real estate market may be drifting dangerously far from its economic fundamentals.
The UBS Global Real Estate Bubble Index is a closely watched measure that assesses whether housing prices in a given market are overvalued. According to Investing.com, the index weighs factors like price-to-income and price-to-rent ratios, lending standards, construction activity, and real price growth. This year, Miami outranked other high-profile cities such as Tokyo and Zurich, both of which also landed in the high-risk category with scores of 1.59 and 1.55, respectively.
What exactly does it mean to be at the top of this list? In simple terms, a housing bubble occurs when property prices rise far above their underlying value, often fueled by speculation and exuberant buyer demand. When reality finally catches up, the bubble bursts, prices tumble, and those left holding the bag can suffer serious losses. UBS, however, is careful to note that a high bubble risk signals mispricing, not necessarily an imminent crash.
Miami’s journey to this precarious position has been years in the making. Over the past 15 years, the city delivered the strongest inflation-adjusted price gains among all major cities in the UBS study. Yet, as Daily Mail reports, this rapid growth has come at a cost. Affordability for buyers has sunk to near-record lows, and rents have failed to keep pace with soaring home prices. The price-to-rent multiples in Miami now exceed even the extremes observed during the notorious 2006 U.S. housing bubble—a classic warning sign that prices may be untethered from reality.
But the warning lights don’t stop there. High insurance costs and hefty homeowners association fees are making it harder for would-be buyers to enter the market. Regulatory changes have also forced many longtime owners of older condos to address decades of deferred maintenance, resulting in substantial repair bills. These factors, combined with higher insurance premiums driven by increased environmental risks, are contributing to selling pressure and causing homes to linger unsold for longer periods.
“Recently, housing inventory has rebounded to near pre-pandemic levels, as slightly lower mortgage rates and significant levels of embedded equity have prompted some homeowners to list their properties,” the UBS report notes. Homes in Miami now sit on the market for nearly three months—almost four weeks longer than a year ago, according to Daily Mail. For many sellers, the days of bidding wars and instant sales are over. The properties that do sell are often going for less money than they might have fetched just a year prior.
The numbers tell a sobering story. Florida as a whole lost $109 billion in total market value from July 2024 to June 2025. In Miami, the median sale price of homes dropped to $595,000 in July 2025, down from $640,000 just a year earlier. During the pandemic, Miami’s real estate experienced a dramatic boom as Americans flocked to the state, driving prices sky-high. But now, with buyer enthusiasm waning and developers having built too many new properties, prices are deflating. The market is beginning to cool, and properties are taking longer to sell.
Despite these mounting pressures, UBS does not predict a sudden crash. The bank expects price growth to turn negative in the coming months, but several factors may prevent a sharp correction. Miami’s coastal appeal and favorable tax environment continue to attract newcomers, particularly from the U.S. West and Northeast. Real estate prices in Miami, while high by local standards, remain well below those in New York and Los Angeles, making the city relatively attractive to out-of-state buyers. UBS analysts also point to resilient foreign demand as a stabilizing force, even as local affordability erodes.
“Miami’s coastal appeal and favorable tax environment continue to attract newcomers from the US West and Northeast, with real estate prices still well below those in New York and Los Angeles,” the UBS report states. This influx of new residents, many with significant purchasing power, has helped cushion the market against more dramatic declines.
Yet, the risks are real. As UBS stresses, “bubble risk” is a signal of mispricing, not a guarantee of disaster. History teaches that when affordability gaps and rent-price divergences become too wide, corrections often follow. Miami, Tokyo, and Zurich may be leading indicators of where exuberance in global property markets is most stretched. In Miami, the divergence between owner-occupied home prices and local rents is particularly glaring—suggesting that speculation, rather than genuine demand, may be driving prices higher than the market can support in the long run.
The broader context is worth considering. Other cities in the high-risk category include Tokyo, where home values have climbed 35% in just five years while rents and incomes have barely budged. Zurich’s prices have soared 60% over the past decade, with price-to-rent ratios now the steepest in the world. Cities such as Los Angeles, Dubai, Amsterdam, and Geneva fall into the “elevated risk” zone, while Toronto, Sydney, Madrid, Frankfurt, Vancouver, Munich, and Singapore are classified as “moderate risk.”
Matthias Holzhey, lead author of the study at UBS Global Wealth Management’s Chief Investment Office, explains, “Broad exuberance has faded, with average bubble risk in major cities falling for a third straight year.” Yet, Miami’s strong lead is a stark reminder that certain markets remain especially vulnerable to correction.
For Miami homeowners and prospective buyers, the coming months may bring more uncertainty. Regulatory changes, higher insurance costs, and a glut of new construction are all reshaping the landscape. With properties taking longer to sell and prices edging downward, the city’s real estate market is entering a new phase—one marked by caution, recalibration, and watchful waiting.
As the world’s real estate watchers keep their eyes fixed on Miami, the city’s fate may serve as an early warning for other markets where optimism has outpaced reality. For now, the Magic City stands as a case study in how quickly fortunes can shift when housing prices soar beyond what the fundamentals can bear.
