Decisions of whether to hold or sell an investment should not depend upon past events but on future expectations. If you expect values to go up and rents to increase in excess of cost increases, then hold on. Whether you paid too much or not in the past does not matter, except psychologically. Even whether or not it is making money now or not, does not matter. Investing is all about future expectations.
Investors who were courageous enough to buy pretty much anywhere in San Diego at the bottom–about 2009-10–have profited handsomely. They looked at the losses everyone in real estate had just suffered and decided that it was a good time to buy. They based their decision on their future expectations, not the past. So the question now is what will happen to San Diego rents and costs, and market prices. I wish I knew.