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Don't beat yourself up over the drop in the last year- in the big scheme, I assume your father and you have both owned your houses for many years, and you have still done very well. Furthermore, think about it this way- if you sold your a year ago, you would have bought at the top down here anyhow, and lost $ here.
I'd put your house on the market at a decent price, but don't price at the very top- go a bit under. Also, you mentioned the large inventory. Its in your best interest to have your house SUPER presentable- get the landscaping taken care of, seal the driveways, clean EVERYTHING, etc. If you are priced right and you are the cleanest house that prospects see, you'll get it done.
Bake chocolate chip cookies in the house the whole morning of any open houses/showings. Smell is the first and most powerful thing when people enter your home. Sounds dumb and fruity, but its worth doing. Hell, you can get a pillsbury dough log and just bake those up. Don't go the candle route, its not the same.
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