Not sure what to do

OK, so, my partner and I live in Rhode Island (one of the most competitive, expensive, and supply-starved housing markets). We bought our home in 2018. We were both working at the time (combined income over $100K). We are now both out of work but looking, but things aren't looking good — at least in the short term — so we're considering selling before the market takes a turn downward more in line with the rest of the country.

We bought for $185K, still owe $140K, and our home has an estimated value of ~$370K and comps in our area suggest that is accurate. The house could use some cosmetic fixes (paint, sod, some fascia board replacement) but the structure and mechanicals are good.

We have always been interested in moving somewhere more rural (upper New York, VT, NH, Maine) anyway, so we figure selling would net us enough to pay for a large chunk of a cheaper home ($225K or less … yes, I know that probably seems like a fever dream, but we've seen in our research that it is possible).

I might have access to some of my retirement money, enough for a good down payment, but I'm also kind of counting on that money to continue living since I've already exhausted my 6 months of unemployment. Otherwise we would have to make the sale contingent on us finding new housing. We've also heard that a HELOC might be a good way to fund a down payment while still living in our current home, but understand that a bank (credit union) likely won't want to do this while we are both unemployed.

I guess the questions are:

• is it a bad move to sell?
• should we stay put and focus on finding work and only then consider selling?
• are we out of our minds thinking we'll be able to find something cheaper when we might be competing with in-full cash offers (considering the markets that I mentioned)?
• is a contingency sale going to hamstring our selling prospects?
• is a HELOC out of the question?
• anything else we should be considering?