1. The prices were inflated to begin with.
2. That the prices may be coming down is not necessarily bad for staying put homeowners and is good for home buyers.
I remeber during the last housing bubble, when a California friend of mine noted that the highger house valuations looked good for them and other home owners ON PAPER, but it was also the reason her two college graduate working children were still living with her and her husband.
That's probably a contributing factor to the decline in home value...