Looking to cash in on a red-hot housing market that has lifted prices an estimated $5 trillion, some homeowners are selling and pocketing the profit.

With home values more than doubling over the past five years in some states and the median price of existing homes nationwide having just topped $200,000 for the first time, realtors in hot markets say more of their clients have sold their homes to lock in gains or are thinking about it.

Although it's impossible to quantify such activity, and the National Association of Realtors estimates the numbers are small, anecdotal evidence suggests home-rich folks are cashing out. Unlike a typical situation where sellers take profits and plow them into bigger houses, in some cases people worried about an upcoming price drop are getting out of real estate altogether.

A client of Coldwell Bank agent Terrence Cook, worried that prices are nearing a top and about to decline, recently put his Sarasota, Fla., condo up for sale. Roberta Murphy, a sales associate at Windermere Exclusive Properties in La Costa, Calif., says a client sold his house after a job transfer and will "stay cool for a while" before deciding whether to reinvest the $255,000 profit in another house. Others are sticking the cash in the bank and renting instead. Some are downsizing or moving to states where houses cost less.

Dean Baker, co-director of the Center for Economic and Policy Research, estimates $5.2 trillion in "bubble wealth" has been created since the real estate boom began in 1996. Still, the decision to sell one's home - and uproot the family and give up the mortgage tax deduction - should not be taken lightly.

"How do you know where the top or bottom is?" says Murphy. One of her clients, figuring prices had peaked, sold their home 18 months ago in the high $500,000s. "The same homes are now in the high $700,000s," she says.

There are circumstances where selling in a hot market makes financial sense, Murphy says. Folks with second homes or rental properties might consider reducing their exposure to real estate and reinvest the proceeds elsewhere. Older people with big houses who want to scale down also have an incentive to sell, as do folks in or nearing retirement looking to hatch an instant nest egg. Recent profit-takers include:


• Penny Dorneman, 47, and her husband, who sold their three-bedroom ranch in Milford, Conn., banked the $128,000 profit and now rent a two-bedroom, $2,885-a-month apartment in Boston. "We have a lovely nest egg," she says. "Like us, people are saying, let's sell now and buy again after the bubble bursts."


• Art Munson, 64, of Toluca Lake, Calif., who recalls not being able to sell his home during a tough patch for real estate in the early '90s. He sold his home recently for seven times what he paid for it in 1979. He now rents a two-bedroom apartment for $2,500 a month. "I felt like it was time to go."

"We have been in a long housing bull market and taking some chips off the table is perfectly fine," says Kurt Brouwer, of financial advisory firm Brouwer & Janachowski.

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