However, it won't be permanent and people who bought their homes prior to the start of the boom and who have no plans to sell or refinance will not be affected too badly.
I bought my current house in the summer of 2001, it is now worth about three times what I paid for it. I put close to 20% down and I have not taken any equity out (though I did refinance last year for a lower rate). I fully expect the house to lose a fair percentage of it's value over the next year, but I don't plan to move anytime soon, I don't need to refinance and I don't need an equity loan. So the reality is that all I will lose is some paper profits that I never had any real plans to cash in on. If for some reason I decided to move (and that would be a "geographic" move, not "upsizing"), I would get less in a year than I would now, but I would also be paying less for the house I was buying -- the real negative would be the higher interest rate, but when you look at the history of mortgage rates, the "higher" rates of today would still have been a "bargain" just a decade ago.
The price of homes and real estate goes up and down. Always has and always will. That's not what concerns me. What concerns me is the impact of a real estate crash on the rest of the economy.