I agree with Vicki, donot determine your Mother-In-Laws selling of her home just based upon the market alone. There are many other variables to consider. The current Market value is only one of them, Also who is to say what the actual market is like in her community. Talking to a Local Realtor can give you some information about her specific market. Maybe houses are not dropping a considerable amount in price.
Best advice always contact a professional, and get some hard numbers not the media's take on the market.
In her situation i would strongly suggest talking to a CPA, and make sure you ask them also what are the tax concerns making a property a rental. If you decide to sell an investment property in 2 years compared to a owner-occupied proprty today there could be huge tax concerns.