When Lina and Jimi Gibson moved into their 850-square-foot apartment in 2009, they figured they'd stay two years while they planned their wedding and saved for a house. Now, with the economy in another tailspin, they're on the fence.
The couple can walk to restaurants and movies from their building in southwest Charlotte. They have a gym and a pool, and they don't have to mow the lawn or repair the roof. Mostly, they don't have to worry — like so many of their friends — that the housing market's slide isn't over.
"I don't want to have a house that's going to be worth nothing or a neighborhood that's going to lose everything," said Lina Gibson, 27, a bank teller. "We just want to start off strong, with no debt. We're just being very careful."
For decades, Americans have aspired to own homes, and everyone from bankers to government officials has worked to make the dream accessible. But around the country, particularly in places hit hardest by the real estate bust, that's changing.
Legions of homeowners remain underwater on their mortgages or unable to move because they can't sell their house. Plenty who want homes can't buy them because credit remains tight.
Look deeper, though, and the trends suggest a larger shift in how people feel about homeownership:
- Droves of potential buyers, particularly young adults, are renting longer even when they can afford to buy, stockpiling their savings or seeking investments they see as safer, real estate brokers and economists say.
- People who do buy are increasingly opting for more modest houses. Recent data show new homes are smaller — and sport fewer pricey extras, such as fireplaces and patios — than in years past.
- Homeowners are staying in their houses longer. Just 11 percent of sellers surveyed by the National Association of Realtors last year had owned their home for three years or less, down from 30 percent in 2006.
Increasingly, consumers seem to be viewing their houses simply as places to live, instead of lucrative investments.
It remains to be seen whether the shift is permanent. Memories of past recessions can fade quickly, economists say, and government policies encouraging home buying aren't likely to disappear, because the housing market remains a critical part of the U.S. economy.
What's more, many say the reasons to buy, from the appeal of a long-term investment to the simple desire to own property, might outweigh even consumers' worst fears.
For now, though, some experts say the American dream has taken a back seat to economic realities.
"We've gone through 50 years of homeownership being the American dream, and in those 50 years, homes didn't do anything but appreciate," said Bill Miley of real estate research firm Metrostudy. "The American dream today is job security and being able to afford gasoline to get to work. It's certainly not buying a home."
Homeownership is a long-held dream for many Americans, but a century ago, it wasn't accessible for most. Often, the only way to buy was to pay cash or take out a pricey loan with a large down payment.
Government policy helped change that. From the beginning of the federal income tax, people have been allowed to deduct their mortgage interest. In 1938, the government established the Federal National Mortgage Association, known as Fannie Mae, to provide local banks with federal money to finance home mortgages, creating the 30-year mortgage with fixed interest and leading to more housing loans.
After World War II, the G.I. Bill helped veterans secure low-down-payment loans with low interest rates. Suburbs sprang up, and the U.S. homeownership rate climbed above 60 percent from 45 percent in the first half of the century.
The U.S. had become a nation of homeowners.
Meanwhile, the government continued to encourage home buying through tax breaks and programs that push homeownership for low-income earners.
Then came the real estate boom. Credit was cheap and easy to obtain, risky products such as adjustable-rate mortgages crowded the market, and by the mid-2000s, homeownership rates had spiked to nearly 70 percent.
"If you had a pulse," Miley said, "you could get a loan."
Consumers kept buying, landing bigger mortgages and borrowing against their homes for other purchases: second homes, boats, college tuition. Investors bought and sold homes quickly, reaping huge profits.
We know what happened next: The financial world nearly collapsed. The nation plunged into its worst recession in decades. People lost their jobs, then their homes. Even homeowners who weren't underwater began to question their investments.
Today the nation's homeownership rate has dropped back below 66 percent. And the housing market is still struggling, despite record-low interest rates and attractive prices.
Prices have fallen more than they did during the Great Depression, research firm Capital Economics reported recently.
Part of the reason the market remains weak is that some people who want to buy can't get loans. The National Association of Realtors, for one, is calling on banks to bring back "common-sense standards" in lending, loosening what the association considers to be too-strict requirements, spokesman Water Molony said.
That would boost sales 15 to 20 percent, he said. He said a homeownership rate of around two-thirds of U.S. households is more realistic than the boom-years peak, saying some people simply shouldn't be homeowners. But Molony said there's a pent-up demand among other potential buyers that could help bolster the anemic economic recovery.
"Housing got a black eye," he said. "But it doesn't really take away the American dream. People still aspire to it."
Kitt Halterman, a Kansas City, Mo., Realtor who specializes in condo sales, said people there still feel good about investing in a house. But she said the market there has had to pay the price for other areas caught up in the housing bubble, which has made lending tighter and required homebuyers to come up with more money to buy.
"That's the thing that's slowed the market," she said. "Once (consumers) think things are settled, I don't think it will change the idea of the American dream being buying your home."
Yet consumers and real estate experts say attitudes about owning real estate are changing. A recent report from Morgan Stanley, for instance, found that the U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country's move toward a "rentership society."
John Bradford of Park Avenue Properties, a Cornelius, N.C., real estate and property management firm, said he's seeing more consumers hold off on buying homes while they wait for a recovery.
"Some renters are thinking, 'Why would I buy when I can rent and invest my money in other things?' " he said.
Charlotte Realtor Matthew Tringali began to see greater demand for rentals in 2008. Since then, managing rental properties for homeowners who can't sell has become one of the biggest parts of his job.
"People are naturally afraid that home prices are still falling," he said.