I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.
I agree that you are accurately describing the economically illiterate thought process, just not that it's correct.
Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.
My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.
If you don’t buy in to libertarian laissez-faire economics, which most people don’t, then this makes sense. (“Makes sense” is a much lower bar than “has the effect that we want it to have.”)