Major bank flags southern US city as the world’s biggest real estate bubble risk, as metrics top 2006 housing levels

Core Insights - Miami's housing market is facing a potential bubble risk, with a bubble risk score of 1.73, indicating high risk compared to other major cities like Los Angeles and New York [4] - The housing inventory in Miami has returned to near pre-pandemic levels, but rising costs from deferred maintenance and surging insurance premiums are pressuring owners to sell [2][4] - Despite a forecast of negative price growth, a sharp correction in the housing market is not anticipated due to Miami's coastal appeal and favorable tax environment [1][4] Housing Market Dynamics - The report highlights that Miami has experienced the strongest inflation-adjusted housing appreciation over the past 15 years, with current price-to-rent ratios exceeding those seen during the 2006 property bubble [3] - Affordability for buyers in Miami has reached near record lows, with home prices diverging significantly from rental prices [3] Regulatory and Environmental Factors - Regulatory changes are compelling condo associations to address long-standing maintenance issues, leading to increased financial burdens on owners [2] - Environmental risks, such as flooding and hurricanes, are contributing to rising insurance premiums, further straining the housing market [2]