Senior citizens mostly own their own homes; typically, the home either has little or no mortgage debt. The people who live in the more-or-less unencumbered home like it just fine and may not be able imagine living elsewhere; so the value, up or down, is not such a big deal. If the value has been reduced by the Great Credit Debacle by a third, so what?—the house is not for sale. It is still a comfy place to live.
Lots of others—those who are not seniors—who bought housing, aka subscribing to the American Dream of home ownership, seems to have been burned by the 2008 experience—paying off a $500 thousand home that suddenly decreases in value to $250 thousand or less, is a very big deal. People who get burned get fearful.
Lots of former homeowners are now renters. Some were hurt so badly that they may never buy again. Lots of new construction is directed towards rental units now. In an economic sense, it’s good that something is being built and that people are going to occupy what’s in the works. Many, who do want homes, are putting off ownership for the time being; some of those are saving for big down payments. I know of a couple who are doing that very thing. If I know one couple, there are probably many couples and individuals who are doing the same. This should translate to high down payments for homes, generating low-interest, low-amount monthly payments and this also may be good for economic stability.
When home buyers work with a bank, the mortgage is created and then sold off to investors, thus transferring the risk. It used to be that the bank held the mortgage for its life—bankers, though, seem to find it appealing to shift or eliminate risk. And, if the bank does not hold the mortgage for long, it may not have to investigate the creditworthiness of the borrower as completely as it did when it was making a 30-year commitment.