According to a new report from Swiss bank UBS, the coastal city, which attracted waves of remote workers during the pandemic, now faces a significant market correction as demand softens and ownership costs soar.
UBS’s annual Global Real Estate Bubble Index ranked Miami first among 20 major global cities, with a bubble risk score of 1.73, well above the “high risk” threshold of 1.5.
Over the past 15 years, Miami has experienced the fastest inflation-adjusted home value growth of any city in the survey.
However, this momentum has stalled dramatically in recent months.
Properties that previously sold quickly in competitive bidding wars now remain on the market for months, often selling below asking price.
The median sale price in Miami dropped to US$595,000 in July, down from US$640,000 a year earlier, indicating a clear market correction is underway.
Homes are now sitting unsold for nearly three months as inventory accumulates and buyer enthusiasm wanes.
Multiple factors are contributing to Miami’s vulnerable position.
Climate-related insurance premiums have skyrocketed, homeowners association fees continue to rise, and regulatory requirements for aging condo towers have substantially increased the cost of ownership.
UBS points to a toxic mix of runaway insurance costs, ballooning condo maintenance bills, and a price-to-rent ratio that has even surpassed the extremes of the 2006 US housing bubble, the report noted.
Despite these warning signs, analysts don’t predict an immediate market collapse.
Miami’s status as a tax-friendly coastal destination continues to attract certain buyers, though affordability has reached crisis levels for many residents and potential homeowners.
The impact extends beyond Miami, with Florida overall losing more than US$100 billion in housing market value over the past year.
Miami isn’t alone in facing bubble risks. Tokyo and Zurich also joined the “high risk” category in the UBS report, while Los Angeles, Dubai, and Amsterdam were classified in the “elevated” risk zone.
