Photo by GRandallJ.

The Washington area’s housing market is the strongest in the country, according to a report which showed housing prices rising nationally. That’s the good news. The bad news is this has started talk about another housing bubble.

According to the S&P/Case-Shiller Home Price Indices, home prices rose by 7.7 percent from March 2012 to March 2013 in the D.C. area. The region’s current index value is 189.70, which means a typical home in the area has appreciated by a 89.7 percent rate since January 2000.

As other parts of the country suffered from the recession, (most of) the D.C. metro area has seemingly continued to flourish. A few days ago, The Wall Street Journal explained why the real estate market is doing so well in D.C. “Boomtown”:

A number of factors are driving the real-estate renaissance. First is a dramatic lack of housing inventory. There are 72% fewer active listings in the entire D.C. metro area now compared with five years ago. In 2007, there were nearly 20,000 new condos on the market. Today, there are fewer than 3,000 units under construction or being marketed, according to real-estate research company Delta Associates.

Washington’s economy—which was never hit as hard during the recession as other major U.S. cities—is flourishing. From 2007 through 2012, the local economy expanded 7.6%, compared with the nation’s growth of 5.4%, according to economist Stephen Fuller of George Mason University. Federal procurement spending in the Washington area increased by 182% from 2000 through 2010, which has led to an influx of contractors, lawyers and consultants. Overall, the area saw a population increase of 776,280 between 2000 and 2010.

The paper also cited large companies moving into the area and government spending as reasons D.C.’s real estate market is, well, booming.

Of the Journal’s “Boomtown” article, Derek Thompson, business editor of The Atlantic, tweeted, “Your quarterly reminder that housing prices in DC are exacerbated by an indefensible height-ceiling law from 1910.”

The D.C. Office of Planning and the National Capital Planning Commission recently held the second of four planned public meetings to review the city’s height limit, which was established by the Height Act. Recommendations will be submitted to Congress this fall.

Oh, and about that impending housing bubble? The Wall Street Journal’s Phil Izzo says don’t worry about it.