Appreciation 100% based on NOI.For a 5 year time frame I would not gamble on or rely on SFH appreciation.

Generally speaking, a primary residence shouldn't be considered an investment, as the cash flow is always going to be $0 in the best case (and if you purchased hoping for appreciation, you were just gambling).So, assuming you like your house, plan to live there long-term and it's paid off, why be concerned with the short-term valuation?

General consensus around here that I have seen is that:Buy and hold guys don't want the liability of a tenant getting sick or claiming to get sick from exposure to some area that missed treatment, or the soil in the yard if it has some unknown contamination.And flippers aren't willing to gamble that they got it waaay low enough to take the back end discount that they will need to likely take to get a end buyer to purchase.That is what I've seen pretty much every time this question has been posed in the past.

Everything is a gamble,, just be ready.

The parameters are set heavily in their favor to minimize their risk of having to pay out.So you can pay for their services and gamble that you will be that 1 in 1000 customer and come out ahead, or you can do everything on your end to limit your chances of needing their services, and keep the $$ in your own pocket

Just seems like such a gamble.   

That will be a big part of choosing the next steps.Some lenders will do a short-sale without missed payments, but usually with a hardship (illness, job / income loss, etc.).If there's some balance between appreciation and the current short fall in the LTV, you might consider subject-to or just make up the short fall at closing and avoid the short sale gambling on appreciation to make you whole (not recommended).Dunno ... too many unknowns ...

Should you buy with a negative cash flow in markets like California or Las Vegas and gamble on appreciation (in the early stages of a declining market)?

Way too big a gamble for all but the richest people.

I grew up in an oil field family where my dad worked offshore for a good portion of my childhood.