Home Equity Going Down

Apparently the equity in your home is related to the amount that your home is worth based on the housing market rather than the original purchase price of your home. So what is going to happen to the home equity loans when the market price of people's homes goes down? Will the home owners no longer be able to sell their home for a profit but instead will need to take a loss b/c they have essentially two mortgages that add up to more than the selling price of their home?