If you own a home, and it goes up in "value" 50%, and then back down without you ever selling, does that mean you "lost" that 50%?
Its more obvious with something tangible. If I give you a $100 bill, and then you drop it down a drain, have you lost it? Of course you have.
The same is true for the value of assets though. You had the opportunity to cash it in by selling, you could have secured a loan against the value, you had the status of the wealth of owning a more expensive home. Those things have real implications on your life, and now you don't have them. It doesn't really matter that it's not actual cash.
You also lose at least 5-6% of the value of real estate every time you buy or sell. So given that buying/selling real estate is complicated and expensive, and moving is complicated and expensive, for the vast majority of people, the value of the house going up and down _in the short term_ is mostly irrelevant.