Remember, yes properties in the area are selling for a lot less. But more than likely they are conventional sales with conventional mortgages for folks who have good credit. There are enough people out there who are having a hard time and who have lost a home and are desperate for a chance to get started again. You might be the savior, bank, investor that they need. Terms are what are going to get your home sold now, not price. Think creatively and get someone to help you come up with choices.For example we have a plan for renters here who have been willing to pay 6 months to a year in rent up front to get a house. That may buy you some time until the market changes.
I would agree with the previous member. If there is anyway that you can keep the home and rent it you will do better in the long run than walking away and going into foreclosure. Did you buy the home using the VA? If it is a VA mortgage, then a buyer with good credit can assume the mortgage for very little money. Why would they do that if you are upside down on the loan. Maybe they are going to be there for at least 5 years and they can afford to wait for values to turn around. They can get in for very little cash. A short sale is a possibility if you can the lenders to operate in a timely manner. The organizational paperwork with the banks in short sales can be time consuming. I persoally have had buyers walk from a shorty sale because they got tired of waiting for answer from the bank.
The credit problems that you will have from a foreclosure will haunt your for a long time. Forget getting a new loan for several years. Rent your old house to at least cover your mortgage and taxes or close to it.
Wherever you are heading, rent for at least a year and wait to see where the market goes. Good luck, l know a little of what you are going through, my daughter-in-law is from the Phoenix, Scottsdale area.
Secondly, if you purchased a year ago, and if your home does show well, you might still be able to sell it for more than you paid - especially if you purchased through a short sale. Just check with a good Realtor and let them provide you with the comps - especially any that has sold within the last few months. Then, just price your home at or below that price.
Best of luck....