OK, lets start with the basics. When you buy a house, you normally take out a mortgage for a fraction of the price. So let's say you buy your house for $250,000, and you pay $50,000 of your own money and borrow $200,000. If you sell your house for $250,000 you pay $200,000 to the bank (less any amount of the mortgage you have paid already) and keep $50,000 for yourself. If the price is more than $250,000 you keep the difference yourself.
If you sell the house for $150,000 then you still owe the bank $200,000. You have to pay the bank $200,000, which you don't get from the sale. You have to find $50,000 from somewhere else. You've also lost the $50,000 you had before. Now as long as you don't sell the house you are OK - you keep making the mortgage payments and hope the price of the house goes up again. But if you have to sell, because you can't afford the payments any more, or you have to move for work, then you are going to be in real trouble. You owe much more than you can pay, and might have to declare bankruptcy. Even in the best cases people suddenly find they can't spend money because they have to put all of it into paying down their mortgage to get it to be less than the house price.