Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move somewhere else. As such reducing home prices across the board isn't that problematic, because there's no loss in 'value'. You can still sell your apartment in Vancouver and buy a 5-bedroom in Saskatoon.

The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?