I would suggest running some more detailed numbers to help with your decision. How much $ will you save on insurance/interest/depreciation if you sell a car? How much are you spending a month on gas, and how much of that will be cancelled out by light rail passes? In the end you may find that you are "losing" much less than $700/mo to be much, much happier. I can be a bit of a worrier at times, so I like the idea of keeping the house as it gives you the option to move back in a year or two if needed/desired.
Also, if you haven't already discussed a price point with your brother, I would suggest renting to him much closer to market value. Does he actually need (and want) the 'help'? Or do you just feel weird like you are profiting off of him? (You aren't, but I could see myself feeling that way)