economy

with all the subprime and assorted other economic messes going on, I have to wonder if the ludicrous housing prices across the country will start to plummet soon.  if that does happen, I wonder what other kinds of disasters we'll face when people realize they're locked into a loan for a house previously worth $750,000 and now barely over $200k.  It's my understanding that that's the price range for houses in California that would be an average middle-class dwelling in my neck of the woods, and basically it has the same buyer target over there.  Can any middle-class person really afford to lose $500k?