Your home isn’t worth what you think it is. And it shouldn’t be.  As we all complain about declining home values—down 9 percent nationwide from the market’s peak, far worse in some cities—the fact is, this bust is good for us.  You wouldn’t know that, though, from the ongoing panic in Washington, where the “crisis” label has been affixed to what in reality has been a modest correction to a frothy market.

The urge to interfere with markets in order to create an artificial floor for real estate values seems to be an irresistible impulse in the capital. The landmark housing legislation passed by Congress this summer—while appropriately tightening regulation of the mortgage market—contains a variety of gimmicks aimed not at shoring up ­the solvency of our financial system but at propping up real estate prices in an effort to avert the ongoing correction.

Giving a $4 billion handout to communities to buy up distressed properties, for instance, amounts to economic malpractice. The legislation contains relief for some homeowners facing adjustable interest rates as well as new tax credits cooked up by homebuilding-industry lobbyists to entice buyers—as if the problem in recent years had been a lack of incentives for people to purchase houses.

This attempt to interrupt the proper functioning of markets is a national disgrace, rewarding speculators and reckless borrowers who helped drive the runup in prices, while penalizing those who couldn’t afford a house in the first place. But you can expect the government’s response to the supposed crisis to become even more counterproductive if real estate values continue to fall.

Nobody in Congress or in the media is sufficiently focused on the millions of people who can’t afford a home or those who were too prudent to be talked into one of those no-money-down mortgages with the great introductory rates. These are the victims of the country’s real housing crisis. The problem is that homes remain unaffordable for people earning decent money in many of the country’s largest cities. The current correction will help make houses more obtainable for first-time buyers, another reason to stop trying to prop up inflated values.

A slowing economy traditionally drives down housing prices for a time, but what’s currently going on is a case of the tail wagging the dog. The housing bubble of recent years, fueled in part by distorted government policies that encouraged people to bet on an unrealistic appreciation in their home’s worth, was artificially bolstering the overall economy. Much of today’s panic stems from the fear of falling housing prices wreaking havoc on the economy, rather than the other way around.

Instead of interfering with the natural drop in housing prices, Congress and regulators should be rethinking the policies that encouraged Americans to treat their homes as inexhaustible gold mines.