Kudos to Kaye's answer. Real estate is a long term investment and always pays in the long run.
I feel so sad when I hear, "How screwed am I" from home owners. A home owner is not always screwed, it is just time to re-evaluate your options. Personally, I'd rather take a negative $800 cash flow a month, equallying $10k a year for 5 years, than take a 15%+ loss today just because the market wasn't friendly to my need. Of course, the big question is, "Can you afford it?"
You've already been told to talk to a CPA and highly recommend you do. Will there be any tax incentives for you take this loss annually?
Since, I don't know specific numbers these are for conversation purposes only. If you can afford the $800 a month loss then consider, what will the tenant be matching. $1000 a month? Basically for $800 a month, you have a tenant matching $1000. You get the tax breaks (speak to CPA), and have something to show for it (house) which will eventually stop depreciating and will always be worth something. Traditionally real estate always goes back up. We still can't buy houses for the same price we could in 1990. Real estate doesn't always stay a buyers markets, how long is the big question. I don't know of a company 401k account that matches like being a landlord with renter.
Lastly, you may be able to afford an $800 month negative cash flow, but can your stomache handle it? Very stressful and you might deem putting a price tag on your serenity and sell now. Either way, don't be too bearish, real estate, if approached as a long term investment, is in my opinion the safest financial risk.
You've gotton some good suggestions and I encourage you investigagte them all. Most importantly talk to a CPA.
Best of luck,