Swiss Financial Company calls San Fran Housing Market ‘Overvalued’

As reported in a recent article on Curbed, Union Bank of Switzerland (UBS) released its annual Global Real Estate Bubble Index in which it ranked San Francisco as one of the most expensive cities in the world.

The Zurich-based financial firm also added that the city is heading toward a risky price bubble.

As evidenced in statistics provided by UBS in a recent press release, the firm said of San Francisco’s housing market: In the wake of the technology boom and foreign demand, real house prices have risen 65 percent since 2012.

Price growth has slowed in recent quarters, yet remains 6 percent above the national average.

Despite the thriving economy, average incomes have increased by only 10 percent since 2012 and have not kept up with house prices, making housing affordability an even larger impossibility.

Although estimates provided by the U.S. Census show otherwise, with San Francisco’s median household income having gone from $73,012 in 2012 to $103,801 in 2016, according to the American Community Survey, UBS is correct in stating that income can’t keep up with housing.

Paragon Real Estate estimated in June that the average price of a single-family home in San Francisco increased nearly 100 percent since 2012, actually breaking $1.5 million.

This number appears much more extreme than the 65 percent UBS figures. There’s at least nominal consensus on the trend.

Of 20 cities assessed in UBS’s bubble index, San Francisco ranks tenth. That is a bit concerning, however, it is not bad enough for UBS to describe the city as a “bubble risk.”

UBS ranked SF’s high risk as largely steady the last three years in a row. It’s nothing compared to number-one ranked Toronto. But UBS still terms SF “the most overvalued U.S. urban housing market” that it studied.

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