My sister wound up in a situation where she owed a bit more than her house was worth during a steep downturn in housing prices, but she hung on and sold it for a huge profit years later.
We are putting our SF home up for sale this month; we are fortuneate that in our area, prices have not fallen too much at all, sales are slower but the value is hanging in there. We plan on going to SoCal and sit on the sidelines in a rental for a year and then jump back in but with 1/2 the mortgage payment and twice the house.