They're trapped, like so many members of their generation.
Steve and Tasha McLaughlin have had two kids since they bought their two-bedroom "Brady Bunch"-style house in South Natomas seven years ago. They need more room, but they can't move: The house they bought for $256,000 is worth just $90,000, and an attempt to sell it failed.
"We are literally stuck," said Tasha McLaughlin, 33. "There's no light ahead."
The McLaughlins and tens of thousands of others like them in the Sacramento region are unable to take the traditional second step on the American home ownership ladder. They are captive to outsized mortgages born in a real estate bubble, which have balances much higher than the homes are now worth.
During the boom years, young families could sell their first homes to buy larger ones, using the equity they built up in their starter models. But for those who bought at the height of the market, plunging prices have wiped out their equity and then some.
Many of these people haven't lost their jobs and aren't behind on their mortgage payments, so they don't qualify for a loan modification that could shave off big chunks from their monthly housing payments.
"If you bought in the last few years, you're not going to have a lot equity, and you're going to be stuck for a while," said Andy Thielen, a Realtor with Lyon Real Estate's downtown office.
One of the only ways to move with intact credit is to rent out the first house and buy a second, bigger one to live in. But only those owners with enough money for a second down payment can afford to pursue that course.
The forced absence of so many young adults from the homebuying market has eroded demand for move-up houses, a crucial piece of the local real estate economy.
Andrew LePage is an analyst with DataQuick, a San Diego real estate information firm. He said the lack of move-up buyers can easily be detected by looking at what's happened to sales of homes in the $250,000-to-$600,000 range.
In 2006-07, when the local market was near its peak, that segment accounted for 70 percent to 80 percent of all sales in the Sacramento region, according to DataQuick. These days, homes in that price range account for less than 19 percent.
Sacramento-area home sales have picked up lately, but they tend to be for rock-bottom deals in neighborhoods thoroughly scoured by foreclosures and short sales.
Traditional move-up neighborhoods, such as Sacramento's Land Park and Greenhaven-Pocket, are seeing less activity. In the ZIP code that includes Land Park and Curtis Park, for instance, sales volume today is 36 percent below the neighborhood's 10-year average, according to DataQuick. Sales in the Greenhaven-Pocket area are down 31.7 percent.
David Moultrie, 31, a painter who lives in the Pocket, said the sluggish housing market has prevented him and his wife, Emily, from moving into a bigger home. The couple paid about $350,000 six years ago for a two-bedroom, which Moultrie said is now worth about $200,000.
They looked at several homes in the $280,000-to- $325,000 range last spring, but all of them were either "backed up against a freeway or were fixer-uppers," said Moultrie, who needs the extra space for his growing business and his 2 1/2-year-old daughter.
He's now in the process of adding a bedroom and bathroom to his existing home, paying for the renovations through savings. A home equity loan, he said, is out of the question given his house's loss of value.
"It's just a bad situation," Moultrie said.
For Julia Himovitz, the reality check came in June when she and her husband, Gregory Ries, put their two-bedroom, one-bathroom house in Tahoe Park on the market.
They listed it at $269,000, only to discover that a similar house across the street had sold for less than half of that. They later dropped the price to $240,000 about what they paid eight years ago before pulling the house off the market altogether.
Himovitz, 32, an attorney, said she and her husband have decided to rent out their Tahoe Park home and use their savings to help buy one that's big enough to accommodate their family, which now includes a 2-year-old son and a 70-pound golden retriever.
"We love our house and I love the location. It's a wonderful place," she said of her current house."But if we want to have more children, it would be hard."
Tasha McLaughlin, the South Natomas homeowner, says her situation is already hard, and she doesn't know what to do about it. The market fall has left her stuck with a house that's too small and a mortgage that's too big. She and her husband pay $2,000 on their interest-only loan; that payment will rise to $2,400 a month in 2017.
McLaughlin, who runs a small business that organizes lacrosse tournaments and clinics, said she tried to get her loan modified in recent years. The first time, she waited months before receiving preliminary approval, only to find out that her loan was sold to another bank before the modification could be completed. Earlier this year, she approached the new lender for a loan modification but was rejected because she hasn't missed a mortgage payment.
McLaughlin said she and her husband, Steve, also tried to sell their home last fall when he took a job in New Jersey as ticket sales manager for Rutgers University.
But nobody bought. Her husband opted to quit his job after nine months, and the family returned to Sacramento. He now works as an alumni director for a local high school.