When studying foreclosures nationwide, the Joint Center for Housing Studies at Harvard University found that smaller homes stand to benefit as future homeowners turn toward more affordable, efficient housing. In its "State of the Nation's Housing" report, the center said more younger and older homeowners are expected in the coming decades. But rather than searching for larger dream homes, the new consumer will be focused on rental properties and smaller residences. And even with the report predicting that many baby boomers will age in place, the current mobility rate suggests at least 3.8 million could downsize their homes over the course of the next decade. Their preference is likely to be smaller residences. This turn toward frugality comes from the myriad problems in the housing market, which includes millions of homeowners underwater, record-low home sales, and downward spiraling home prices, the Harvard center said. Not to mention, middle-income homeowners — those making in the range of $45,000 to $60,000 — are facing severe cost burdens, with more than half of their income going toward housing in the year 2009. Overall, about 19 million Americans were found to be paying more than half of their income in rent or mortgage. “While the sharp declines in both home prices and interest rates have left homes in many places more affordable than they have been in decades,” said Eric S. Belsky, managing director of the Joint Center for Housing Studies, “stubbornly high unemployment and tightened lending standards have limited the ability of many first-time buyers to capitalize on the situation.” Belsky added, “The state of the nation’s housing is sobering. Total housing construction over the previous decade now barely exceeds the lowest level of any 10-year period in records dating back to 1974, but vacancies remain elevated because the recession has driven demand down so sharply.” Researchers who compiled the report said a quick change in factors — such as increased employment and a brighter economy — could shift the housing market back to normal levels as evidenced by the 2010 homebuyer tax credit, but when or if those factors will come into play remains uncertain. But other groups are also reporting that apartment rentals are on the rise as consumers shun long-term mortgage debt. Write to Kerri Panchuk.