[smsm42]

I don't think you calculations are entirely right. Let's consider home of price X. Most people would have to pay 20% down (you can get a loan for that too, but that would be overleveraging so let's ignore it). Let's say prices go down 10%. You lose 0.1X of your down payment, or half of it. Let's say you have to sell and move to another place, where you want to buy a similar house, now costing 0.9X. You need to put up 0.18X downpayment for this. However, after the sale you only have 0.1X (ignoring the sale costs, which can easily cost you another 0.05X-0.06X and making situation even worse). So you're now have to come up with 0.08X cash, and fast, otherwise you don't have a place to live in. Most people don't have this much free cash just laying around - it'd be in tens of thousands of dollars. If you are moving into more expensive home, the situation would be even worse.