While Tracey and Todd Fine were engaged, they purchased a two-bedroom condo in Chicago's East Ukrainian Village. The price was high, but given the white-hot market in the adjacent Wicker Park neighborhood, they thought it was a strategic investment.
Today, their newlywed nest is a 1,200-square-foot obstacle course of toys and books. The couch stands a mere two feet from the dining room table, where their almost 3-year-old twins wave spoons of ice cream. Meanwhile, kindergarten -- something that wasn't even on the radar when they bought in 2006 -- looms.
"We are stuck -- and we can't go anywhere," said Tracey Fine, 34. She estimates they would lose more than $100,000 if their condo sold tomorrow.
At a very different place in the life cycle is Suzanne Allison, an empty-nester with four bedrooms and a spacious yard. Despite slashing her $360,000 price tag to $269,000, a "for sale" sign has hung on her Flossmoor, Ill., home for 900-plus days.
"I can't pursue anything," said Allison, a divorced mother of three. "It's impossible to plan what's next."
The continuing economic doldrums and housing slump has significantly reshaped the mobility of Americans, who are accustomed to pulling up stakes for better jobs, schools or climate. With just 11.6 percent of U.S. residents moving during 2010, migration has slowed to its lowest point since World War II, according to William Frey, a senior demographer at the Brookings Institution.
"We are still stuck in the mud," said Frey, who attributes it to a confluence of falling home values and tighter credit policies.
The paralysis ripples beyond real estate, affecting communities in unforeseen ways, experts say. When people aren't moving, retailers don't sell as many appliances, swing sets or other durable goods. Builders, landscapers and moving companies lose out, which yields less sales tax and more unemployment.
"I liken it to musical chairs, but they won't restart the music," said Michael Hicks, an economist at Ball State University. "People are still forming families. They're just not moving up in housing."
With young adults unable to take traditional steps, schools are among the first to feel the pinch.
Take Crystal Lake School District 47, where school enrollment peaked in 2006-07 with 9,200 students. Enrollment has fallen to 8,168 and is expected to shrink by another 1,000 students in the next seven to eight years, said Superintendent Donn Mendoza.
"The single biggest difference is in the number of exiting eight-graders and incoming kindergartners," Mendoza said. Despite strong test scores and bond rating, "we're having a challenge getting younger, newer families with children into our district."
Home prices in November were at 2003 levels, according to the S&P/Case-Shiller home price index.
"The situation is especially tough on younger people," Frey said. "It's one reason why we see so many putting off all the things that they would normally do in their 20s and 30s."
Real estate agents said savvy sellers will price their home right and make it up on the purchase end, taking advantage of bargains, low borrowing rates and little competition from prospective bidders.
"Ultimately, it becomes a quality-of-life issue," said Jim Murphy, who owns a real estate sales office in Frankfort, Ill. "If you really want to get to the next stage, you may need to take the loss. Otherwise, you could be in for a very long wait."
When the Fines bought in 2006, at the peak of the bubble, they didn't see a crisis brewing.
Units in their new building were on the pricey side, going in the $380,000-$390,000 range. But with the open layout, prime location and top-of-the-line finishes, it seemed like a risk-free investment.
Not that they're complaining. They're not underwater, they have savings, and Todd Fine, a lawyer, has a good job. "We're better off than lots of other people," Tracey Fine acknowledged.
Still, everything is cramped. The double-stroller is parked in the foyer; the kitchen counter doubles as an office. The twins, Parker and Wesley, run relays down a long hallway.
When Grandma visits from Houston, she sleeps in the living room. With the boys asleep in one bedroom, his wife in the second and his mother-in-law on the fold-out couch, Todd Fine burned the midnight oil preparing for a recent case in the only spot available: the bathroom.
"I know a lot of people in the same predicament and we all regret the [housing] decisions we made," Tracey Fine said.