... If we do we'll lock in the loss. If we decide not to and stay here for 10 more years it will probably be moot. But DW has a terribly hard time with the thought of taking the loss. I'm more, eh, it is what it is. It won't break us, but it certainly was bad timing.
Not telling you anything you don't already know, but bite the bullet. In our situation, it hurt--but luckily (?) we had moved and needed to sell. Slashed the asking price a couple of times and it was gone. Have occasionally looked up prices in our old neighborhood since then--including last month. We never would have gotten our heads above water on that property, and are quite happy to have moved on.
On the other hand, we bought three rentals and our FL home cheap in 2009 - 2012 for a total of less than $1M. If we were to sell those houses the combined gains would be just about the half million we'll probably lose on the Beach house. So que sera ,sera.
This is great solace, which should comfort your spouse. I've got my fingers crossed that whenever our present house/land is sold, we will end up even for life on residential real estate. Would take a hefty gain though! In any event, we've been blessed to live in a couple of very nice locations/houses; the monetary losses don't erase those memories. Sounds like you are in the same situation.