Prose and Soule both want to stay in their new homes for more than a few years. And that, according to many real estate experts, is the hallmark of a smart buyer, especially for those who are buying in areas where home values may not have hit bottom.

"My advice to consumers: 'Your home is not an ATM, and your home is not an investment,'" says Barry Zigas, director of housing policy for the Consumer Federation of America in Washington, D.C. "Your home is a place to live."

If you're planning to move in the next year or two, "it's probably not the time to buy a house," he says.

In some areas, home values are still sliding. Worst hit last year was Cape Coral/Fort Myers, Fla., where homeowners saw values sank 39.5 percent in 2008, according to NAR statistics. Other heartbreakers were in California -- the Riverside/San Bernardino area, down 38.3 percent, and Sacramento and surrounding areas, down 36.8 percent.

When Richard B. King recently sold his home in Long Beach, Calif., it sat longer than he anticipated and he accepted $263,000 less than his original asking price.

"The market went down," he says. Neighbors kept lowering the prices, so "we kept lowering our price to be competitive. It's a matter of, do you want to sell the place or not?"

Some towns are seeing home values increase. Best off was Elmira, N.Y., where median home prices went up 7.5 percent last year, along with Wichita, Kan., which jumped 5.4 percent, and Amarillo, Texas, rising 5.3 percent, the association says.

One big factor affecting home values stems from the large number of distressed sales. Roughly 40 percent to 45 percent of today's sales are foreclosures or short sales, Yun says. Historically, that figure usually hovers around 5 percent, he says.

Mary Rubin recently helped a family member buy a $255,000 foreclosure in Ft. Myers for $116,000. While it was in excellent condition, the house was never worth the original $255,000, she says.

Opportunities for first-time buyers

"We estimate that half of the homebuyers (today) are first-time buyers," Yun says.

Credit the triumvirate of low interest rates, lowered home prices and an $8,000 tax credit for first-time buyers who become homeowners before the end of this year.

"It's a great time to be a first-time buyer," says Eric Tyson, co-author of "Home Buying for Dummies." "In many parts of the country, this may be the best buying opportunity in a generation."

"It's a good time to trade up because the higher-end market in many areas is weaker than the entry-level market," he says.

Still, buyers are facing intense scrutiny when it comes to their ability to afford a home. Lenders are examining not just credit, but job stability, down-payment amounts and how much cash buyers will have available after buying a home.