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Will the American Dream still include owning a home?

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Most Americans want to own their own home. Some even call it a biological urge, based on our human desire to nest. Whatever the current economic condition of the country, whatever the latest programs offered or atrocities committed by government and banking institutions, that desire doesn't seem to change and is unlikely to change even 25 years from now.

Perhaps Thomas Jefferson put it best, "A right to property is founded in our natural wants."

Even after a devastating housing and mortgage crash that resulted in millions of foreclosed homes and trillions of dollars of home equity lost, the majority of Americans have not given up the idea that ownership is representative of their economic dream.

(Read more: Housing stocks that stayed hot through winter: Pro)

Here's what's driving the new American Dream
Here's what's driving the new American Dream

"Americans continue to want to be homeowners and they want to do it in a more careful and responsible way given the crisis that we've been through, but there is no evidence that we're going to abandon the home ownership society," Housing and Urban Development Secretary Shaun Donovan said in an interview.

Seventy percent of respondents to a monthly Fannie Mae survey in January said they would buy if they were going to move, an all-time survey high.

"The aspiration to own a home is unchanged," said Doug Duncan, Fannie Mae's chief economist. "Changing the rules of funding makes it harder or easier, and that's a little bit of what's going on today, but the aspiration is unchanged. That has been consistent across the crisis."

Prior to the housing boom, presidents from Ronald Reagan to Bill Clinton to George W. Bush touted the "home ownership society." They have been accused of pushing mortgage giants Fannie Mae and Freddie Mac as well as the FHA, the government mortgage insurer, to loosen their underwriting standards. The result of that push, critics say, was the over-leveraging of the American public.

Today, underwriting is tighter than during the housing boom. Some claim the pendulum has swung too far the other way, keeping potential buyers out of home ownership. The mantra has in fact changed politically.

(Read more: 4 million renters want to buy. Can they?)

"A home is supposed to be our ultimate evidence that in America, hard work pays off, and responsibility is rewarded," President Barack Obama said in an August speech in Phoenix. He stopped short, however, of calling for a home ownership society, and in fact warned against a return to the past. "In the runup to the crisis, banks and the government too often made everyone feel like they had to own a home, even if they weren't ready. That's a mistake we shouldn't repeat."

Home ownership rose to a high of just over 69 percent during the housing boom after averaging around 65 percent for much of the previous decade, according to the U.S. Census. It has been falling steadily since, now down to 65.2 percent.

As housing recovers and we look to the future of home ownership, the biggest question for the next 25 years is not do we want to own a home, but how in fact will we own a home?

"The most interesting question right now is will we build a housing finance system that supports that home ownership society or not?" asked HUD's Donovan.

There is now one leading bill in Congress that would dismantle mortgage giants Fannie Mae and Freddie Mac, which have been under government conservatorship since September 2008. It would leave a limited government backstop, much like the FDIC, but put the mortgage business largely into the hands of private investors, which is where it was during the housing boom.

Private investors have been extremely leery of dipping back into the mortgage business, and have only done so in limited, highly rated offerings.

(Read more: Homeownership: The elusive American Dream for millennials)

Remarks this month by Michael Stegman, counselor to the Treasury secretary for housing finance policy, to a banking conference put the current situation in perspective:

Losses sustained on investments are still fresh in everyone's mind. The new market today for mortgage-backed securities is unnecessarily thin and unscalable because rather than rebuilding from the ground up, putting in place a solid, sustainable foundation for future growth, the bond issuers continue to structure their offerings using varied terms, requirements and documentation that have failed to instill investor confidence.

The housing finance system envisioned by the administration would require that the secondary market help provide liquidity to all segments of the primary market. Separately, it must also support affordable housing through its basic design, augmented by an explicit and transparent affordable housing funding mechanism.

Twenty-five years from now one would hope and expect that a new mortgage system would be in place. Some argue, however, that the housing crisis, combined with changes in social behavior, have altered for good the expectation and desire for home ownership. A new single-family rental market, 15 million homes strong, grew out of the crisis, and it is backed by large scale, institutional investors who claim they are in this new asset class permanently.

"As institutional ownership with its substantial equity capital and professional management provides increasingly attractive rental options in suburban America, we believe the demand for rental housing will grow—not as a transitional, substandard or second-class alternative to home ownership—but as a preferred option to the financial and often inflexible demands of home ownership," said Laurie Hawkes, president and chief operating officer of American Residential Properties, a single-family rental REIT based in Phoenix.

Donovan disagreed that rentership would remain as high as it is today.

"There have been some institutional improvements in management and other things, but in terms of fundamental demand, I would be surprised if it really becomes, in the scope of our larger housing market, a major change 10, 15, 25 years from now."

Hawkes, who watched the single family rental market grow from 10 million to 15 million homes in a remarkably short period of time, argues that her renters are middle class families with kids and a dog, who are looking for the same thing that home buyers are, minus the stress. And they will be looking for the same thing 25 years from now.

(Read more: Recovery? Nah. Home ownership is for suckers)

"There is also a growing group of Americans, such as the millennials, (many of whom watched their parents lose their homes), who are choosing to rent for a variety of reasons—financial flexibility, job mobility and a decided preference for "outsourced" property maintenance. Both of these groups are seeking well-located, well-maintained single-family housing with good school systems in safe neighborhoods," said Hawkes.

Fannie Mae's Duncan conducts monthly surveys on home ownership, and disagrees with Hawkes' premise.

"The stigma related to renting has gone away, but we don't see any change in their aspiration to own a home at some point," he said.

Duncan admits that home ownership among the youngest adults has been falling consistently over the last four decennial censuses. He said that's because the young population is staying in college longer, which delays marriage, which delays childbirth, which is the biggest trigger to home ownership.

"They've been adding to their human capital but their life spans are expanding, so you're pushing home ownership out in time," he added.

Home ownership may end up being a shorter-term proposition, with Americans renting for longer periods of time in young adulthood and then again as they downsize into longer retirements. Or perhaps the housing market will rise to meet the new demands.

"The trends at the beginning of people's lives, of couples living longer, what I think that will lead to is new or expanded roles of home ownership that don't fit traditional views," said Donovan. "We are likely to see more smaller units and condominiums and co-ops. Units that have services, help for seniors, other forms of assistance, even if they're still homeowners."

As for a "nest egg," the housing crash taught everyone that home prices don't always go up, and so younger generations may look to other investments to create wealth.

Wealth, in fact, is what is making America increasingly urban. That is because 80 percent of wealth is created in cities, according to researchers at MIT. In an article in MIT newsletter Spectrum, its editor Liz Karagianis notes that younger generations are also less prone to ownership and more interested in sharing.

"Thanks to the Internet and social media, climate change and a strained economy, a trend has emerged towards sharing. Consider, they say, house shares, car shares, bike shares, office shares, or farm shares," Karagianis said.

The Internet, social media and new technologies have changed not just the world we live in, but how we live in it. Will it change our fundamental desire to own things, especially that most important personal item, our shelter?

By CNBC's Diana Olick. Follow her on Twitter @Diana_Olick.


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