But even a big tax credit won't be enough to lift them into a bigger, better home.

The Centreville, Va., couple are trapped in a two-bedroom townhouse that's worth less than their unpaid mortgage. They face the same predicament with a condo that they own and rent out. Unable to sell either property for what they owe and with their equity wiped out, a new mortgage is out of the question.

Chris Basso fears it may be years before they can buy a bigger place — a real concern, because Candice is scheduled to give birth to their first child in August, and their townhouse already feels cramped. "I'll have a teenager by the time housing values come back up and I can get out of my house," says Basso. With a baby coming, "We're trying to figure out where to fit all the furniture. We still scour the home listings every day just to see what we could afford now. It's heartbreaking to seewhat we could get today with our housing dollar now, but we're stuck."