As the money supply increases, the value of the currency decreases. And as the price of housing comes down, the value of the housing dollar does increase (all things being equal).
Currency [dollar defined assets] inflation (increased money supply) is exactly what the housing bubble is.
Capital markets will tighten up and the value of the dollar will continue to decline, but remember, the value of the dollar you refer to is relative to other currencies and commodities. The housing dollar (the amount of house a dollar will purchase) will not decline, it will rise.
