Do some research on the previous bubbles and see which areas recovered faster
Some of the things that prevent a market from dropping too much is the school district. More recently is the walkability and general feel of the neighborhood.
As the population gets older, more people want to downsize, and if your current home is in a desirable area for folks whom want to downsize it might be better hang around for while.
You also need to consider the reasons for upgrading, if you need more space for growing family, then you don't want to wait around for bubble to burst.Like a rising tide raises all boats, conversely a ebbing tide will lower all the boats.
Like the other commenters said, get out of the ARM and get a fixed mortgage while you still can. The rates can shoot up very quickly without much warning.
Renting on a temporary basis is viable option, but if you have more stuff, that can fit into the apartment, you need to include the storage space. Don't forget to include cost of move from house to apt and to house. Look at the time span on how long you will be renting, consider that while you are renting the bubble might not burst, or if it does, the real estate in the area that you are looking at does not drop that much.