UBS Real Estate Bubble Index—2022 (transplants, real estate market, apartment)
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Miami continues to benefit from substantial inwards migra- tion and strong foreign investor interest. It recorded the stron- gest annual house price and rental growth rates among all cities in the study. Prices are almost 50 percent above pre- pandemic levels, pushing the city further into overvalued terri- tory. Although affordability in Miami has worsened sharply since 2019, we believe it remains reasonable compared to the other US cities analyzed.
Los Angeles saw house prices rise in line with the booming US market, driven by its strong labor market and structural housing undersupply. But imbalances are high and have increased further since last year with unaffordability reaching near all-time peaks.
Boston benefited from the highest income growth of all cities in the study on the back of its strong and diverse economy. Imbalances remained roughly unchanged compared to last year. However, higher income cannot offset the impact of higher interest rates and rising house prices on affordability. The potential implementation of rent control in the city also adds a degree of uncertainty to the for-sale housing market.
San Francisco recorded strong price increases, ending a period of weakness since 2018. However, rents are still lower than pre-pandemic levels. Considering subdued hiring in the tech industry and the prospect of continued remote and hybrid work models, the outlook for house prices in San Francisco is the most subdued among US markets covered.
New York exhibited the lowest price growth since mid-2021 of all US cities analyzed. It continues to trail more affordable tax-, business-, and regulatory-friendly cities and states. Regardless, the city remains the least affordable among
US cities covered (see spotlight New York p. 18).
Last edited by elchevere; 10-20-2022 at 01:03 PM..
I would like to think that what's happening in these places is not so much bubbles bursting but rather the market exhaling, after inhaling for years. A breather, as it were.
One has to wonder what will become of SW Florida after the massive hurricane devastation and home values there. Also the very problematic rent inequity in markets like Orlando and Tampa which proportionately is on par with cities like SF, San Jose and NYC when factoring salaries and percent needed just to pay rent. That's roughly 50% of the population alone who can never get a toehold to save for a downpayment and what's fueling the real estate market are foreign investors and transplants selling out of higher-priced markets elsewhere. Both instances have an expiration date so to speak and aren't sustainable over time given FL's drop from the top few states to move to in recent years.
One has to wonder what will become of SW Florida after the massive hurricane devastation and home values there. Also the very problematic rent inequity in markets like Orlando and Tampa which proportionately is on par with cities like SF, San Jose and NYC when factoring salaries and percent needed just to pay rent. That's roughly 50% of the population alone who can never get a toehold to save for a downpayment and what's fueling the real estate market are foreign investors and transplants selling out of higher-priced markets elsewhere. Both instances have an expiration date so to speak and aren't sustainable over time given FL's drop from the top few states to move to in recent years.
We are definitely in a state of crisis when it comes to housing affordability in many areas of the country, including all of the areas you mentioned. I think our reliance on the free market and housing developers to alleviate the problem is really naive. They are in the business of making money and the housing crash of the 2000s proves they don't care people, which is their prerogative. Which is why I have long espoused the opinion that the federal government must invest in building housing units that lower income and middle income homebuyers can buy or rent at below market rate-that way it's not really a 'giveaway' but it's more of an opportunity to give people the dignity of having a roof over their heads. I don't know if this idea, which to me seems simple, is even feasible, or legal, or whatever, but I see tons of homeless people every day who I feel shouldnt have to live that the only thing stopping us from actually helping them is the will to do so, which is sad.
This UBS report only evaluated 5 US cities, all listed above. Other US cities aren't fair value or undervalued, they just weren't included in the study.
We are definitely in a state of crisis when it comes to housing affordability in many areas of the country, including all of the areas you mentioned. I think our reliance on the free market and housing developers to alleviate the problem is really naive. They are in the business of making money and the housing crash of the 2000s proves they don't care people, which is their prerogative. Which is why I have long espoused the opinion that the federal government must invest in building housing units that lower income and middle income homebuyers can buy or rent at below market rate-that way it's not really a 'giveaway' but it's more of an opportunity to give people the dignity of having a roof over their heads. I don't know if this idea, which to me seems simple, is even feasible, or legal, or whatever, but I see tons of homeless people every day who I feel shouldnt have to live that the only thing stopping us from actually helping them is the will to do so, which is sad.
100% agree.
Where I live no less than 8-10 apartment communities have been built within the past couple years in a suburban area of Orlando with a population of around 100K. Each of them are luxury apartment communities with average rent around $2000 per month, in an area dominated by service-sector jobs and a median wage around 35K pre-taxes. Not sustainable....
I'd say that some cities in Idaho are that way. There was an insane uptick in home values during the pandemic by people fleeing SoCal.
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