You both hit on the issue - you only come out with cash by moving to a less expensive location or a significantly smaller size home. Without that, increasing property values make us feel weathly, but really just mean taxes go up.
I do know people that have done ok by buying houses in poor condition (a foreclosure actually), fixing them up over the course of a year or two, then selling and buying another place in poor condition to repeat the process. You have to put a lot of your own time into this, and have generally increasing property values for this to work once you account for the cost of selling and buying.
And you have to be careful with capital gains exclusions if you do it too fast.
This smoke is no joke. We went for a walk this evening to try and see what might be a cool sunset with all the particles, but all we ended up with was sore throats. Can't imagine what it's like nearby the fires.