Until house prices stop falling, it won’t be clear how many more people will default on their mortgages. Even homeowners who stay current on their mortgage payments will be affected. With the value of their largest asset dropping, many will decide to spend less and save more, aggravating the economic slowdown.

On Tuesday, the Conference Board reported that Americans were more pessimistic about the economy’s direction over the next six months than at any point since the bad old days of the 1973 oil embargo.

In many ways, it would be better if the housing correction would happen more swiftly and sharply. The pain might be worse, but it would be over quickly. We seem to understand this principle when we’re removing a bandage. Why, then, is it so much harder with housing?

Because houses are almost perfectly engineered to trick owners into overvaluing them.

For starters, people have an obvious emotional connection to their house. After you have raised a family or enjoyed long meals with friends there, you are naturally going to place a higher value on it than a dispassionate buyer would. It’s your home.

In normal times, buyers and sellers can still come to an agreement because inflation allows sellers to feel that they have made a nice return on their house. People don’t sell houses frequently, so the sale price of a house is almost always higher than it was when the current owner bought it, just as the price of food, haircuts and everything else tends to rise over a five- or 10-year span. Because of leverage  the fact that people buy houses mostly on credit  these inflation-driven price increases turn into true investment gains.

In the wake of the biggest housing boom on record, it’s understandably hard to accept a new reality. Robert Glinert, a real estate agent in the Los Angeles area, said he has recently been saying no to almost half the sellers who have asked him to represent them. Their initial asking price is just too unrealistic.

“People say, ‘I don’t care about the market  my home is still worth what I paid for it in 2006,’ ” Mr. Glinert told me. “And I say, ‘To you. Only to you.’ ”