Singlespeed, 90065 has been hit very hard with foreclosures. I have sold three houses in that zip code under $250000 this year-all of them were REO. It's very tough right now to get anything appraised because of the dearth of foreclosure activity.
That being said, the market is only getting worse. Selling now would be recommended to cut your losses. We aren't going to see $400k houses in 90065 for a long time. Call me, I've got buyers galore.