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Need to Know: UBS has released its annual house price bubble report. Here are the most overvalued markets.


The housing market is in something of its own recession as mortgage rates have surged. If the economist consensus is right about an existing home sales report due later in the morning, then sales will have fallen 28% from their peak.

That’s why the arrival of the seventh annual UBS global real estate bubble report rings different, coming at the start of a period of retreat rather than during a wave of excess.

“The willingness to pay for owner-occupied homes is likely to take a hit. In cities with strong population growth, such an adjustment could manifest in the form of a prolonged stagnation in nominal purchase prices. But as real estate markets rarely trend sideways, this is not the most likely outcome,” says the report.

Since the UBS report is a global one, only five U.S. markets are analyzed: Miami, Los Angeles, San Francisco, Boston and New York. The bad news is, all five are overvalued. The good news is, none are called a bubble risk. Save Miami, the other cities haven’t seen price growth as strong as the nationwide average, UBS points out. And income growth has been exceptionally strong, though strained affordability will likely start taking its toll, the report cautions.

Globally, the market that seems to be most in a bubble is Toronto, followed closely by Frankfurt, UBS says. Adjusted for inflation, price levels in Vancouver and Toronto have more than tripled in the last 25 years.

“In such overheated markets, with already very stretched housing affordability, the recent rate hikes by the Bank of Canada could be the last straw that broke the camel’s back. New buyers and owners during mortgage renegotiations not only need to pay higher interest rates but are also required to provide more income to qualify for a mortgage,” said UBS.

The UBS ranking is based on five factors: price to income, price to rent, the change in mortgage-to-GDP ratio, the change in construction-to-GDP ratio and the relative price of the city to the country.

The markets

U.S. stock futures


were mostly lower as Treasury yields rose and Tesla results disappointed. The yield on the 10-year Treasury

reached 4.14%. Crude-oil futures

climbed over $86 per barrel.

The buzz


slipped 6% in premarket trade after the electric car maker’s third quarter margin and revenue came in shy of estimates. The miss didn’t affect CEO Elon Musk’s confidence, who says there’s a path for Tesla’s valuation to exceed more than Apple and Saudi Aramco combined, as he also said a stock buyback of up to $10 billion was under consideration.

Musk also said he’s overpaying for Twitter

but excited about the social-media service’s potential.


shares skidded after the insurer said it’s expecting a third-quarter loss, on catastrophe losses from Hurricane Ian as well as rising bodily injury and physical damage coverages. IBM

however rose after the technology giant upgraded its sales growth view for the year.

European telecom equipment makers Ericsson

and Nokia

each slumped after their results. Thursday’s set of earnings includes results from AT&T
American Airlines

and Blackstone

The economics docket features weekly jobless claims, the Philadelphia Fed manufacturing index, and after the open, both existing home sales and leading indicators.

Philip Morris

raised its offer for Swedish Match

to $15.7 billion and separately agreed to pay $2.7 billion for U.S. rights to IQOS heated tobacco products from Altria

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The chart

Oakmark Funds

In his third-quarter shareholder letter, Bill Nygren of the Oakmark Funds produced this chart, showing the ratio of the 50th highest price to equity ratio in the S&P 500 to the 450th P-to-E. That dispersion is 40% wider than normal. “As has often been the case, unusually high volatility leads to a high spread in valuations, which has been—and we believe will be—a good environment to add value via stock picking,” he says.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.


Security name






Mullen Automotive


AMC Entertainment






Bed Bath & Beyond


AMC Entertainment preferred





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A King Charles III watercolor goes under the hammer. An art critic: “It’s not great.”

A California bakery has created a life-sized Han Solo, out of bread.

A British man thinks he’s found the face of former, and perhaps future, Prime Minister Boris Johnson, in a curry.

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The Wall Street Journal: Philip Morris boosts Swedish Match bid and buys U.S. rights to Iqos

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