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San Francisco America's highest housing bubble risk, says major financial company

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We're number one again—alas

Price bubbles happen. They’re a natural and mostly inevitable consequence of the free market doing its free market thing. Given how trying (or terrifying) a bubble and its subsequent burst may be to those in its wake, we don’t really like to acknowledge that, but that doesn’t stop them from happening anyway.

Are we in a bubble now? Well, certain commentators have been saying so for years. But nobody can really prove bubblen-ess until after it’s over.

Swiss financial services company UBS (initials you’re probably used to seeing in the news) is, however, willing to gauge our degree of bubbly risk. Their conclusion, in a report released today, is that it’s pretty high. Not as high as the likes of Vancouver, London, and Stockholm, but still the highest in the US and the sixth highest in the world.

The papers assesses risk in 18 notable cities, assigning them a relative risk score based on how much home values have increased in the last five years relative to other "financial centers." In grossly simple terms, if similar communities are up only 15 percent since 2011 but we’re up more than 50 percent (and we are), that’s a red flag.

Vancouver, where prices are up 25 percent just since 2014, UBS pegs a 2.14 on the risk scale (very high—they only bother to include a Y-axis up to 2.5 on the charts). New York City gets a mere 0.13, which is barely anything to worry about.

San Francisco they assess at 1.27. Not a figure to panic over, but not one to ignore either. This, of course, is just one analyst’s opinion. The longer we go without a big price plunge, though, the more popular the B-word becomes.

Earlier this year,’s chief economist declared that housing in the US was "not a bubble, just expensive," but acknowledged that Bay Area prices are "probably unsustainable." Fitch Ratings said much the same. In fact, some people will tell you that not only did we have a bubble, it burst already.

Layman though we are, we tend to take bubble claims with a grain of salt. It is undeniably true that things have been cooling off all year and that condo demand has contracted, though. And nobody can deny that goes up forever—even if it seems that way at the time.