I would hold on to the house as an investment if it is making money. If not I would consider a 1031 Tax Deferred exchange. This is where you sell the property to buy another "LIKE PROPERTY" within a period of time and there is no capital gains to pay. The money you lose in selling the current house you will more than make up for in buying a larger home ( more units) at a discounted price.You should talk to your tax professional more about this option. Also, it doesn't hurt to get a current Comparative Market Analysis to see what it is honestly worth in today's market.

If you are making money or at least breaking even with the rental and can hold on to it for a few more years, I would continue to rent until the market turns around.

There are several factors in this decision. The location and condition of the home, your financial situation, how long you have been renting the property and whether you plan on returning to the area.

Our local market is not as bad as some may think as our employment picture is getting better by the day. US Navy Base in Newport is growing, providing both military and civilian jobs throughout Newport County. Student population is to nearly triple and there is nearly $200M in construction either underway or planned for very near future for the base.

Also, we are an island with very little land left so our supply is finite.

Please visit http://www.arthurchapman.raveis.com for local housing data. I can also provide a more detailed view of the market in your neighborhood upon request.

P.S. I am a native Islander and live in Portsmouth!

Sharon:
An additional alternative, is allowing a service, such as Mansion Minders (here in the Dallas Fort Worth area) to place a qualified tenant in your home while it is being listed for sale. The tenants are screened and are expected to keep the property in showing condition at all times and are required to allow any and all showings by agents. When the home sells, the tenant moves on to another home that is on the market and leaves your home in move in condition.
Many tenants who do that are those that have sold their own homes, and are building a home, or are relocating.
It is a great benefit for all.
Jackie Black
Texas Best Properties
Keller, Texas

Sharon,

There are many home owners in your situation....considering, renting vs. selling.

A possible approach is one that one of our customers has embraced. They are renting while the property is on the market "for sale." The owners made arrangements yout the renter and were given a special rental reduction rate for their willingness to be inconvenienced because of showing interruptions.

This has met the needs of everyone thus far, the owners have their home on the market and the renters are getting a break on their monthly rental. They also have a six month lease agreement.

Good luck