I agree with your assement of the direction of the RE market, but many (if not most) people cannot really sell, nor does it makes sense for everyone to sell.
My house has nearly doubled in value since we bought it in 2000. Even a 40-50% correction would probably not bring us below the purchase price, and definately not below the balance of our mortgage (we put 25% down when we bought). Since we plan to stay in our house (good schools, location, etc.) I can see no reason to sell and move.
