The $150k loss on a $700k house wouldn't be such a problem if people just thought of houses as houses. A couple of decades ago the $150k would have been thought of as "oh well, I guess I could have paid less for my house if I waited". Now it would be "oh crap, I made a $150k investment loss!".
A young whipper snapper home owner was telling me the other day I should buy any house no matter how crappy it was because straight away "it would start earning money for me". She didn't have any response to the fact that house prices fell over 1% last month in my city and on that basis I would be losing about $5k per month.
