These Markets Are Bubbling

San Francisco was named the most overvalued city in the U.S. in the latest reading of the UBS Global Real Estate Bubble Index, which examines valuations of cities compared to their countries.

The home of the Painted Ladies was ranked first in the nation due to its current real, inflation-adjusted prices surpassing the 2006 peak by 20 percent, meaning that San Francisco is approaching bubble territory. However, the report finds that other global cities are closer, including Hong Kong, Toronto, London, Amsterdam, Vancouver in British Columbia, and Munich; all ranked as in bubble territory, Realtor.com reports. Real estate agent Herman Chan says of his home city San Francisco, "There's a very strong job market here, there's great weather, lots of top-notch universities, and we're the gateway to Asia. So we're going to be fine," yet, Chan says that sellers will have to adjust their prices as buyers become pickier, "We're at this inflection point. It's going back to the new normal."

Meanwhile, Boston was considered fairly valued and Chicago was deemed undervalued, with rental prices rising faster than home prices, according to Woloshin. Tell that to bargain-hunting buyers in the Windy City! That's due to "inflation-adjusted prices still almost 30 percent below their 2006 peak," according to the press release accompanying the report.

Read more