Speak to someone who knows about the tax consequences of the loss, which might affect things, if you can carry it over in some circumstances.
Check out whether banks are actually foreclosing promptly in your area. In a lot of cities, the big banks have stopped foreclosing, I assume to drive up prices and to postpone taking capital losses. If this is the case, there are huge shadow inventories of homes that haven't hit the market yet. In general, I think home prices are being driven up by liquidity factors more than they are being driven down. Yeah, the guy who can't move can't buy a new house, but he can't sell his, either. The idea that you can't sell now and this is a temporary thing is not, I think, likely to be true.
I'd be nervous about renting a house if I didn't check it out every few months. The rental management company doesn't have much of an incentive to make sure the place isn't getting slowly destroyed.
Prices should be going up faster than inflation. They don't build houses in China and import them, and neither do they outsource building them over the internet to India. Yeah, they're doing more partial construction in factories, though.
That home builders aren't building much at these prices indicates to me that prices are low enough, and will generally go up from here, but the inventory still left says slowly. Rental housing is probably a reasonably good place to have money parked at the moment.
The real estate market is more local than ever, with much slower household creation and increasing Detroitization.