It really depends on your personal financial situation. If you can easily afford to keep the Fair Oaks home either as a rental or as a residence, it will regain its lost value over the long term ( four to five years from now )
Or you can "cut your losses" by turning the loss you already have on paper into reality.
That sale will also destroy your opportunity to recover that loss unless you purchase another asset that will gain in value over the next several years.
If you can't afford to keep the home in the short term, the favorable long run aspect of the investment does not help you. - The massive numbers of owners that cannot hold property for the long term is a major reason why prices are so depressed in Sacramento County now.