There was a time when nothing could have kept Andy and Jennifer Branin from owning a Southern California home.
Young professionals--she a financial adviser, he an accountant--who met at Club Med four years ago, the couple have saved plenty of cash. And last month they became prime candidates to buy their first home when they had Tyler, baby No. 1.
Still, the Branins keep renting--at $1,390 a month for three bedrooms in Irvine. And what about the supposed dream of having a house of their own?
"It's an asset that's hard to sell, and it limits your flexibility," said Andy Branin, 40. "For now, we've elected to sit on the sidelines. You're not going to buy for $200,000 and sell for $400,000 these days."
Owning a Southern California home used to offer young people security, stability and--in the 1970s and '80s--spectacular investment returns. But for many young people and families today, there is only fear of a financial albatross.
Although mortgage rates are at some of the lowest levels and homes are the cheapest in a decade, prospective first-time buyers also know that a crippling real estate downturn here has left hundreds of thousands of Californians saddled with homes they can sell only at a loss.
Some young people now display unusual fondness--or at least tolerance--for living in rental apartments, shaking the foundation of Southern California developers whose entry-level residences were viewed as a first step in a lifetime of home ownership.
"The whole psychology of home buying has changed," said Joseph G. Carson, chief economist with Dean Witter Reynolds Inc. in New York. "The house has changed its character from piggy-bank to one of shelter. People know it's an asset that's not going to appreciate like their parents' house did. This is especially true in California."
In 1988, there were 177,615 first-time buyers in Southern California, constituting 53% of those purchasing homes. Last year, the number had plunged to 101,183, or 49%.
Statewide, although first-time buyers have grown steadily as a percentage of the market, experts say that's largely because current owners aren't moving up as often to bigger, more expensive homes.
Lifestyles and reduced job security could continue to affect the market. Couples now tend to get married later and, focused on careers and the shifting fortunes of the job market, prefer staying mobile to the chain-like tug of monthly mortgage payments.
Frank Concannon, 36, and his wife, Piedad, 39, rent an Irvine apartment because they don't want to be tied down. Concannon takes a lesson from a friend who bought a Corona home last year that has already dropped in value. Now, his friend is being transferred to Arizona and must sell his home at a loss.
"If you buy a house and have to move, you could lose a lot of money these days," said Concannon, an accountant with Bergen Brunswig Corp., a pharmaceutical distributor in Orange. "This really is a troubling time. Jobs are uncertain and so is real estate."
What's more, despite massive price declines that make houses more affordable than in past years, California homes are still beyond the reach of many young people.
More students emerge from college saddled with burdensome student loans and credit card debt; they face lower-paying, entry-level jobs and more temporary positions that make buying difficult.
Adding to anxiety is talk in Washington of a "flat tax" and elimination of the home mortgage deduction, with the possibility that home prices will tumble further as decades-old financial incentives are yanked.
"The investment motive for buying a home in California is much weaker than it used to be," said Anthony Downs, senior fellow at the Brookings Institution, a Washington think tank. "It's really just a lifestyle choice now and maybe a good way to force yourself to save some money."
Ask Tracy Orloff of Santa Monica to imagine buying her first house, and the 30-year-old health benefits consultant cringes.
"I know it's silly, but when I think of a home, I think of bankruptcy," she said. "I think of people losing their jobs and not being able to pay these huge mortgages."
Although she could afford an entry-level home, Orloff elects to continue renting a Santa Monica apartment. "For now I'm going to stay a road warrior--a renter," she said.
When younger people do buy--and, of course, legions still do--many are going after existing homes, real estate agents said. Eighty percent of first-time buyers in Orange County last year bought used homes, up from 73.8% in 1988, according to an annual nationwide survey by Chicago Title and Trust. That number declined slightly in Los Angeles County, driven by the boom in new homes in Lancaster and Palmdale, real estate agents said.
With the first-time new-home purchase losing its allure, Southern California's developers are scrambling to develop new strategies.