It's not that bad as long as you're planning to stay in your home and keep your job. Long-term owners are basically indifferent to housing prices, because they're not going to be making any transactions in the housing market. Same reason Warren Buffett is always marveling over why working-age people think news of stock market declines is bad. If you are a net saver, you want asset prices to be cheap and interest rates to be high, because you'll be a buyer of assets.
Also, you're going to be investing in your children for a good 20 years, so it's not that irrational to make a 30yr investment in a house to get them into a good school district.
> The problem is the entire system where you are making a 30yr investment just so your family can get a good school district.
A good school district can be nice (if you'll have kids and if you'll send them to that public school) but the primary reason to have a home is have a place to live where the costs are predictable over the long term, unlike renting.
>> It's good news for people who want to buy a home and have been waiting for prices to fall.
It is bad news also if the market falls, you buy, and then it falls even more.
The problem is the entire system where you are making a 30yr investment just so your family can get a good school district.