If you sell and take a loss ...which is likely....that is ok as long as you can make it up on the other home. And you probably will.
If you have a down payment for the new home in SE and are not worried about your home getting damaged or destroyed via a rental than rent it and wait. The market here in 24 month looks much better due to the UGB and all of that.
Personally.... I would try and sell.
Your sort of a 50/50% opportunity here and it is a tough call.