Should you hold on and wait for the market to improve or should you sell now? That depends on the deal, but it is a decision that requires serious consideration. For example, lets assume Jack purchased a pre-construction property for $250,000 and the most a buyer is willing to pay in this market is $200,000. Jack's cost of ownership after property taxes, insurance, HOA dues, and mortgage payments are about $25,000 per year. Let's assume the market drops another 5% this year and begins to make a slow recovery, as some anaylsts are forecasting.
As shown in the above graph, Jack's losses will continue to grow. Now, let's assume Jack found the perfect renter willing to pay a premium of $1,600 per month. Renting will slow the bleeding, but the cost of ownership will still continue to grow. In fact, unless their is rapid appreciation Jack may never recover his total investment as long as he has the mortgage.
Sellers considering holding out for the market to turn around should do this analysis before making that important decision. For most, it is time to cut their losses and look for the next investment.