Reply #8: Yes you have to sell at market value of course - but you also buy at market value too

[dmallind]

The big losers in any declining house market are those who had/have very little equity and those who are moving to a much stronger market.

But look at it this way - if you paid $300K for a house now worth $200K, and owe $100K on it, selling it at $200K is only a nominal hit if you are buying a similar house also with reduced value to $200K. It's not like prices decline for sellers but not for buyers too.