Correct, but housing price falls are often felt most at the higher end of the market.
Anyway, let's assume for arguments sake that housing price falls are uniform (which they aren't). A 20% fall on an $800k house is a $160k loss. A 20% fall on a $400k house is an $80k loss, so the older couple downsizing is out $80k.
My comment was really based around Akki's notion that primary residence values are not important. It's a fairly bizarre statement IMO. For a lot of people it'll be one of, if not their most valuable, assets which they will depend on to help survive their older years.
