Opinion | Is the United States heading into another property boom?

The US property market continued to strengthen last month with all indicators pointing towards increased growth for the year ahead. An imbalance of low supply and increasing demand has driven up values in even some of the most troubled locations. Domestic and foreign demand is being fueled by historic low financing rates and buyers seeking to capitalize on the price discounts still lingering from the 2008 housing meltdown.

American interest rates hit a historic low last month of 3.25 per cent for a 30-year conventional fixed rate mortgage according to Freddie Mac. Interest rates are projected to begin modest escalations throughout the year but will likely remain below four percent through the second quarter.

The dominating story across the country is low inventory, increasing demand and price appreciation. According to the National Association of Realtors (NAR) total national housing inventory fell 8.5 percent last month to a 4.4 month supply representing the lowest supply since the height of the last housing boom in May 2005. Set against the decreasing demand, total existing home sales are up 12.8 percent compare to December of 2011.

Decreasing inventories and increasing sales pushed the December median price for existing homes up 11.5 percent compared the 2011. The appreciation is the strongest increase since November 2005 and represents the tenth consecutive month of year-over-year price gains. The 2012 annual median home price gain of 6.3 percent is the largest annual gain since 2005.

The new home industry which has been anemic since the 2008 meltdown is also showing signs of recovery. The NAR report indicated healthy growth with new homes sales volume up 8 percent and median price up 13.9 percent compared to last year. The limited supply of new homes provides support for continuing price growth this year as developers attempt to fulfill the new market demand.

While most first tier US markets bottomed out in late 2009 many of the hardest hit regions languished until last year. One of the last to recover was the Florida market which saw property values plummet up to 70 percent in 2008. But even the hard hit Florida market has rebounded and is projected to be one of the fastest growing markets in 2013.