It will boom again (eventually), just like it always does. It's a cyclical business, the trick is in timing the changes.
The overall impact of the real estate market on the national economy should be minimal. The people who are defaulting on mortgages now are the ones who shouldn't have been given loans in the first place. Fiscally sound people are not at risk. As a matter of fact, most of the buyers now are the ones with cash in hand, looking to pick up properties that are distressed and undervalued. It's not uncommon for them to, on paper at least, make $25,000 on a property the day they close. They have no liquidity, but they don't need it. When the market comes back, they will sell at a profit.
It is important to note also, that not all parts of the country collapsed. In general, those areas that suffered the most were the ones that embraced a higher percentage of gimmick mortgages, and consequently saw a big run up in home prices, as the increased supply of money chased a finite supply of houses.
In the near term, you will see a lot more homes for rent, or "Rent to Own". Another drop in mortgage rates would also help spur sales by making more people eligible for loans.