This year, builders expect to complete fewer new apartments in the Baltimore region — about 2,300.

"With less new supply in 2014, we think that rent number is going to go back up," Willett said. "If you're looking to lease an apartment, right now is the time to do it."

Underwater homeowners: The housing bust left millions of Americans, and tens of thousands of locals, owing more on their loans than their homes were worth. The problem hasn't disappeared, but it's easing as prices rise and borrowers make their monthly payments.

About 76,000 homeowners in the Baltimore region were underwater on their mortgages last summer, just under 12 percent of all mortgaged properties, according to the most recent figures from real estate data firm CoreLogic.

That's down from 105,000 — more than 16 percent of the total — at the start of 2010.

The area also has fewer homeowners hovering near the water line with too little equity to cover the cost of selling their property.

With rising prices lifting more boats, some owners who had been stuck can finally move. Homeowners who have never dipped underwater but were waiting to make up more of what they'd lost on paper during the bust might decide to hit the market, too. That could mean more choices for buyers after a slim-pickings year.

"As prices go up, people that previously were reluctant to sell become more willing to do so," Bankrate.com's McBride said.

Affordability: Rising prices — and mortgage rates — mean the housing market isn't as affordable as it was a few years ago. But "right now, affordability is still better than average," said Chen, the Moody's Analytics economist.

A family earning the typical income for the Baltimore metro area could buy a home that costs 77 percent more than the region's typical price, assuming a 20 percent down payment, she said. The measure, modeled after the National Association of Realtors' affordability index, has averaged 65 percent since tracking began in the 1970s, she said.

Still, high sales prices from the bubble, rising rents and pinched incomes mean many local residents are living in decidedly unaffordable housing.

Just under 24 percent of mortgaged households in the Baltimore metro area were strapped in 2012, with housing costs eating up at least 35 percent of their monthly income, according to the most recent data from the U.S. Census Bureau's American Community Survey. That's an improvement from 2008, when 27 percent of mortgaged households were in those straits, but worse than in pre-recession 2007.

The trend is similar for renters, except even more so. Rent ate up at least 35 percent of monthly income for four out of every 10 tenant households in the area in 2012, the Census Bureau said.

Home building: Looking to buy a newly built home? You'll probably have more choices.

Moody's Chen expects a faster rate of home building in the region this year than last, followed by "a much stronger pace of construction" in 2015 if shortages in materials and labor don't hold builders back.

"What we're expecting is basically that the housing market is coming back, jobs are coming back," she said. "The supply of new homes is so low that builders will really have to pick up the pace of construction in order to satisfy that demand."

That's good news, she said, because housing construction fuels job growth in fields as diverse as retail and manufacturing. Job growth, meanwhile, prompts further home construction. The opposite cycle was at work locally and nationally after the housing bubble popped.

Firms have already begun shaking off that years-long hangover. Baltimore-area permitting officials gave builders the go ahead to start construction on 40 percent more houses, condos and apartments last summer than a year earlier, the most recent data from the Maryland Department of Planning. The 2,356 approved units represented the most summer activity by far since 2005.

Russ Dickens, president of the Home Builders Association of Maryland, said 2013 started off relatively strong for the region's builders and developers. But the rise in mortgage rates, higher material costs and the government shutdown all dragged on the latter half of the year.

Still, he's hopeful for 2014. The recession and bumpy years since kept plenty of twentysomethings in their parents' homes — potential customers as the job market improves.

"We're pretty optimistic," said Dickens, a partner with Elm Street Development, a McLean, Va. developer that works across the region. "There's still a lot of pent-up demand there."

jhopkins@baltsun.com

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