From the mortgage perspective the values of homes are not really dropping but instead they are adjusting. If you look at a mortgage as an investment in Real Estate, you can compare the market. Just as anything. Stocks, futures, and Real Estate, the price is driven by demand.
Demand is down right now. I believe the media is playing a big roll in that but the values for existing homes are holding steady at 2004/2005 value. The new home market is really getting pressure to lower prices.
This is just the opinion of Ron Yarbrough - Kansas City Mortgage Expert