A number of cities are at risk of a real estate bubble burst, but Chicago is not among them, according to UBS’s 2017 Global Real Estate Bubble Index.

The Real Estate Bubble Index rates cities on the following scale: 

  • Bubble risk: Greater than 1.5
  • Overvalued: 0.5 to 1.5
  • Fair-valued: -0.5 to 0.5
  • Undervalued: -1.5 to -0.5

The index ranks Chicago at -0.66, putting it solidly in the undervalued category. The index ranked the Chicago market in the same category last year as well. While Chicago may have an undervalued real estate market, it isn’t an inexpensive market. If you want to buy a median-priced home in the city, you need to earn approximately $63,000, well above the national average of $55,000, according to MarketWatch.

New York and Boston are in the fair-valued categories, while San Francisco and Los Angeles rank as overvalued. All of the cities ranked as a bubble risk are outside of the United States. These cities include Toronto (2.12), Stockholm (2.01), Munich (1.92), Sydney (1.80), Vancouver (1.80), London (1.77), Hong Kong (1.74), and Amsterdam (1.59).

The federal tax law could play a big role in shaping housing markets across the country, but dire predictions that it would trigger a crash in home values have yet to come true, according to The Washington Post. San Francisco, overvalued on the UBS Index, is vulnerable to precipitous price drops because of its high mortgages and taxes, but its prices rose nearly 10 percent year-over-year, according to the report.

A Moody Analytics prediction forecasted that the GOP tax plan would hit Chicagoland particularly hard. The data suggested that DuPage, Lake, McHenry, and Will counties would be among the 30 U.S. counties with the most potential loss in home value growth. Illinois has some of the highest property taxes in the country. High taxes paired with the federal tax law’s caps on mortgage interest and property tax deductions could have a significant impact on the housing market. As The Washington Post points out, the full effect of the tax plan has yet to be felt in real estate market. Just what will happen to the market in Chicago and its surrounding suburbs remains uncertain. 

Another piece of the Chicago real estate market is changing. At the end of last year, the city reached a peak in its building boom with 60 cranes operating on various projects in the city, up 400 percent compared to 2010. But, that boom is coming to an end. Construction has started to slow after six years of steadily increasing, according to Chicago Now. The slow in residential construction could actually be positive for the housing market. Too much residential construction too fast might make it a struggle to find buyers and tenants. Chicago Now also points out that rising construction costs — up 4.9 percent from 2016 to 2017 — also put positive pressure on home prices.