Here's part of a great post by Tom Vanderwell at Paul Kedrosky's blog:

1. 6 months ago is ancient history. What your neighbor sold his house for 6 months ago doesn't matter. What the seller was asking for the house 6 months ago doesn't matter. What matters is what the market will support today.

2. Don't worry so much about what you paid for your house. Instead, look at the difference between what you can expect to sell your house for and what it's going to cost you to buy the new one that you want. I expect you'll find that those are much more important numbers (unless you end up without any equity in which case you don't sell).

3. Now is not the time for do-it-yourselfers. When the inventory levels are, depending on property type and area, any where from twice as much as is healthy (single family homes near my hometown) to 750% as much inventory as there should be (condos in Florida from what I've heard), you need to find a professional to help you navigate the markets and get your house noticed. I'm not, frankly, just talking about calling the Realtor who sold the house up the street. I'm talking about calling a high caliber professional who knows what it takes and can really give your house the attention that it needs. People like Greg and Teri and Jeff are examples of the types of Realtors who have the knowledge and talent to help you navigate through this market and make wise decisions.

4. Any interest rate that starts with a 6 is a good number. Check out the attached chart. From 1971 to 1998, we did not see any mortgage rates that started with a 6. Frankly, we've gotten spoiled in an era of cheap credit and we need to keep things in perspective.

Read the whole thing.