It's too difficult to answer your question without knowing how much you owe or what the comps really are for you home. Yes, there are many foreclosures in your area and probably will be for quite sometime to come. How would you answer your own question if the market continued to drop for another year? Are you really willing to pay out of pocket for the next several years until the market catches up to the price you would like to get for your home.
These are things you need to consider. If you were much closer to breaking even in cashflow it may make more sense to rent, but $300 negative may be to much. Do the math and roll the dice, cause if you rent or sell now, no one really knows what may happen in 1,2,3,or 4 years from now.
Ask your current Realtor to closely analyze your local market and see what it will really take to get your home sold NOW.
Best of luck.