I guess it depends on where you live.
In the Bay Area (California), certain neighborhoods have been hit by foreclosures and such but there are still very strong markets in the San Francisco Bay Area. Selling my home now to downsize (just to cut down on monthly costs) would be a net loss. My home value has been appreciating steadily (even in this economic climate) and I've even received 2 offers for my home even though I didn't even put it out on the market.