If the govt steps in with more help than low interest rates then that would be dangerous. It'd create a moral hazard and set up the conditions for the next bubble. Most people won't have to give up their homes, just their dreams of a fast buck. In the late 80s the UK went through a period of widespread 'negative equity' - a term that will soon be tripping off the tongues of many Americans - but its economy still held up.
And for those posters who'll no doubt hate me for waiting smugly for the crash...I don't see that what I'm doing is any worse than hoping for continued house price inflation that will price our children / grandchildren out of the market.
This is not a once in a liftetime opportunity, and there's no window about to close. In 10, 20, 40 years from now there'll still be 20-something couples buying first homes at reasonable multiples of their annual incomes, not living in mobile homes or taking out 60-year mortgages. To expect otherwise is to be asking to be slapped by the market.
The idea that real estate will crash and nothing will change, except real estate prices come down, is a false one. A lot of people are gonna be wiped out. Many will be left looking for someone to blame. A lot will be bitter that they've been screwed (yet)again. And the economic, political and social impact will be enormous. Expect to see many news shows that feature folks crying on their sofas.