I know lowering the price seems like the chicken #$$% out of it, but honestly, your agent/Realtor is probably right. It also depends on where you are at in Arizona, not all areas have decreased the same. For example, we here in Tucson were not hit as hard as Phoenix and the surrounding cities.
Please consider speaking with a CPA (for any tax benifits of holding or selling) and a financial consultant but in the end, only you know or can decide "how much of a loss is too much".
Best of luck.
I've never heard a buyer ask, "How much should the seller lose before it's a good deal?" They often ask, "How low can we get it for?" At the time they are asking this question, they have a level of interest in buying. As Meredith asks, what are your objectives?
If it's to recover a certain dollar amount out of the sale, the buyer doesn't know or care about that they only want to buy a house at what they determine is a fair or good deal.
If your objective is to get it sold quickly and move on, pricing may be the key.
Before I ask a seller to consider a price drop though, I have several steps I go through to make sure it's the logical step.
Is your home the best marketed, easiest to show, most attractively staged home in its price category? Comparing yours to your sold competition, why did they sell and yours didn't? Is there anything about your property that can be changed for significantly less than the next price drop? I once suggested to a client that we spend $2000 for carpet or drop the price $10,000. They did the carpet and had an offer in 10 days. Another seller who didn't use my services wouldn't paint their interior. They liked purple and felt the next buyer would too or wouldn't be put off by painting. Enough buyers were that they sat on the market for months, dropping the price numerous times and finally after repainting got an offer.
Fix anything about the house holding back buyers. Have your agent fix anything about the marketing that isn't drawing in showings and finally price it to be compelling if you want to make it go away.
Ask your Realtor for recent comps in the area - pay close attention to SOLD properties - those are the ones people have actually opened their wallets for. What made them choose others in your price range? Is anything selling in the area in your price range? Price your property so it is the best deal on the market among the competition. Be as honest and as brutal as you can and don't take it personally! The market doesn't care how much you paid for it or what your losses are. Prep yourself for worst possible case - there is a price that you won't go below under any circumstances. If the comps show that that's where you'd have to sell it, then you are probably better off renting for now.