Despite robust demand and waning supply, there was an institutional check — appraisals — that kept prices from increasing too much, Curtis said. During the housing boom several years ago, appraisers often did not hesitate to accept a price well above a home's value. That's not happening now, Curtis said.
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"I came in right around the appraised value, so I don't know if I got much of a deal," said Robert Karrs, a client of Curtis' who bought a home a few blocks east of Patterson Park at the end of May, the height of the selling season. He got his rowhouse for about $250,000.
Like the Shirahs, Karrs was a first-time buyer and tired of renting, which he said was getting more expensive. Plus, interest rates — he got a mortgage for under 4 percent — were too good to pass up, he said.
Average home prices in neighborhoods all around Patterson Park increased significantly last year. In Highlandtown, where about 70 homes sold in 2012, the average sale price jumped 21 percent from 2011, to just under $140,000, according to The Sun's analysis.
In Canton, a favorite neighborhood for young professionals, the average sale price rose 17 percent — to $276,000. More than 450 homes sold in Canton last year, an increase of 130 units.
Redfin agent Lynn Ikle already misses 2012's increased sales volume, like the one Canton experienced. She negotiated the sale of 82 homes throughout greater Baltimore in 2012, she said. Inventory has just been too tight this year for that sales velocity.
"Last year was really good because we had great [interest] rates and we had normal inventory," she said.
The Baltimore region started out last year with over 12,000 active listings, enough supply to last more than 9 months, according to RBI. It ended 2012 with about 9,500 listings, RBI said. That supply would last less than five months —shifting what had been a buyer's market to one favoring sellers— because of increased demand.
"I have so many buyers that if they could find the right house, they'd be under contract," said Ikle, who is seeing many first-time buyers. However, not many potential move-up buyers, she said, are listing their homes and looking for new ones.
Beth Dixon and her husband, Bob Berkebile, in their 30s and with a growing family, were able to move into a larger home last year in Phoenix, northeast of the Loch Raven Reservoir in Baltimore County. They were in a situation many young families are not: They didn't owe anything on their former Parkville home.
"We ended up buying a house that on the surface looked very dated," Dixon said. But at $325,000, they feel like they got a steal for the home, which sits on two acres and didn't take much work to spruce up, she said.
They closed on the house, which appraised for over $400,000 and was originally listed for $440,000, last March, Dixon said. The average sale price in 2012 in the Phoenix ZIP code slipped 3 percent annually, to $526,000, according to the Sun's analysis.
Most current homeowners are not in the position of Dixon and Berkebile, so the supply-and-demand problem is worsening, experts say.
While more first-time buyers are entering the market, too few people are letting go of their homes. The reasons are many, observers said. They don't feel they have enough equity to move up. They're worried about the economy. Or they don't want to put a for-sale sign out because there's nothing on the market they want to move into — a problem that compounds itself.
The buyers are out there, but "sellers just aren't responding," said George Mason's Price.
As 2013 progresses, the industry will wait to see if sellers emerge this spring and whether home building will pick up enough to help alleviate the inventory problem, he said. Both of those factors will be influenced by what happens in the next few weeks in Washington, Price said.
"The biggest story of the year is the inventory shrinking," he said. "It's historic lows. We're seeing the lowest inventories, in some cases, in a decade."