OMG, what will they do now? Some of these people only saw a 200%, or so gain over the last few years.
I'm truly happy *some* of those people.
I got out of there a number of years ago, never to return. But many people have refinanced their homes to take advantage of the appreciation of the past. Now the owe $300,000 on a home they originally paid $140,000 for. If the value of the property falls below what they owe... Well, can you say massive bankruptcy? If that should happen the banks, mortgage companies, real estate lenders will be right behind and many of them hold mortgages in your town too.
It could get messy and we can't lose sight of the fact that some foreign governments would be happy to help it along by moving some of their investments away from the U.S. I don't try to predict the future but I do watch those who make their living by correctly doing so. When they get nervous, I do too.