Averages are totally misleading in this instance.
Remember the old real estate saw: "location, location, and location."
Houses in desirable neighborhoods will maintain or increase sales and prices. Houses in speculative and/or less desirable neighborhoods, are going to be more affected.
Fer instance, 1600 Pennsylvania Ave is likely to go for a significantly larger sum in 2008 than in 2004. All is well with the housing market, it remains, location, location , location.
Location is the key, but what someone would pay half a million dollars for in certain areas is a house I wouldn't even live in. I'm fortunate not to be looking in those areas apparently, or I'd be very unhappy.
Here's a question nobody asks:
Does it reach a point in a desireable neighborhood where the price goes so high, that it becomes prohibitive and the price itself then drops desirability?