The California real estate market may soon enter a new phase, as interest rates decline after the federal rate cut earlier this month. But while hot housing markets like Los Angeles and San Francisco seem like they’re always in demand, according to a recent analysis, one may be at risk of being in a bubble.
Los Angeles had the fourth highest risk of being in a housing bubble of 25 major cities across the globe, according to banking giant UBS , which analyzed residential property prices in the past year. The risk has increased since its last report in 2023, with a high ratio of what it costs to own a home in the city versus rent one. LA has also seen a falling population in the last decade.
One place where the trend could reverse, though, is San Francisco. When interest rates rose in 2022, SF home prices corrected about 10%, causing its market to slow down. But now, with rates falling and a robust stock market, its market could speed up again…