"There are a lot of unsettled policy issues on the table right now that, if they're not handled right, could further set back the housing market," said Richard DeKaser, an economist at Parthenon Group in Boston. "Fannie and Freddie have historically lowered interest rates, and eliminating them will increase the cost of home ownership."
Lowest in Decade
The U.S. home ownership rate dropped to 66.5% in the fourth quarter, the lowest in more than a decade, according to the Census Department. The rate probably will retreat another percentage point by 2013, according to Meyer, of Bank of America Merrill Lynch, and Lea, the finance professor. That would put it back to a 1997 level.
"People will still aspire to own their own homes," Lea said. "They'll just be a lot more practical about it."
Pauli, the California renter, said she has no such aspirations, at least for now. She pays $1,500 a month for her three-bedroom, single-family home with a two-car garage, granite kitchen countertops and stainless-steel appliances. Her neighbors who bought before the housing crash typically have mortgage payments of about $2,800 a month, Pauli said.
"I don't see myself purchasing, even with all the great prices I see," Pauli said. "Going to bed every night worrying about your home value doesn't sound like a good time to me."