my understanding is that the economics of housing are a bit different than other assets. as it is difficult for a lot of people to sell houses at a loss en masse, people end up getting "stucK' in the house until the normal increase in housing prices catches up to the overpriced amount that they paid.
the has some good articles on this topic.
i imagine only a handful of places are going to experience big drops -- New York and Boston come to mind. Larger cities like Philly, Chicago, D.C., San Francisco, and LA are also likely to be hit. That being siad, I doubt most of these cities will see sudden drops of more than 20%.