Have you actually contacted a real estate agent? That's the first place you should start rather than looking for yourself. A good agent sometimes knows of properties that are getting ready to come onto the market before they ever make it to the public's notice. And they have a LOT more info at their disposal in order to find something "right" than you do. If you're serious about this issue, then you should start making formal overtures. Explain it exactly like you did here. Ask the RA about your home's market value now, and after any renovation. Get some real world educated guesses from an experienced professional.

And also talk to contractors. I'd bet you are underestimating the costs of renovation if you are saying that it would only cost 25% of your home's purchase price to do such an extensive reno. I'd expect the costs to be closer to 75-125%, depending on if the major home systems like electrical and plumbing have already been updated and whether or not the you actually have room to raise the ceiling on the top floor without completely raising the roof. Most likely, with the required insulation, you would have to use spray foam to achieve the needed R values, and that does not come cheap. If you have to completely reframe the roofline, totally forget this. You're completely blowing the budget without getting enough in return.

"A number of posters here often suggest moving instead of massive renovations & I could use some input here. We're thinking about a move vs remodel and I think we're landing on the side of "Remodel" instead of "move" even though it doesn't make sense financially."

Not everything is about making money.

"However, if we were to sell it wouldn't pay back at more than 40% of our costs."

Changes (even improvements) rarely pay back their cost.
you do have the benefit of what you want though for the time you live in the house.

I would hate to factor in the time an effort I have expended om the house I live in.
I know I will recover the material costs, but never the 'cost' of the time spent.

The lights that come on when the pantry door is opened (three LV pucks on the ceiling with a low voltage switch circuit on the door) are worth the time spent to design, build, and install everything.

We use the pantry multiple time per day, ad it was a dark pit before (tough to get light from the hallway when you are standing in the door blocking it).

"DH does not want to move & we really like our current location. We back up to woodlands that abut a farm, so our 2/3 ac lot feels a lot more private than it would if there was another house behind us."

As the RE agents will tell you "location, location, location."

While something can happen to the surrounding land to make it less attractive, living in a place you enjoy is worth an awful lot.

I really enjoy living on a street that has no through traffic.
The only folks driving are the neighbors.

Children can actually play in the court safely.

HollySprings: Yes, we have contacted a real estate agent (the same one that sold us this house, she's great) and she expanded our search list to include a lot of other towns. As for the reno estimate, we have estimates from 3 contractors that range from $72k - $87k. We're in a pretty high COL area, and our house cost between $350k & $400k. So 25% is an accurate number. Knowing the price of houses here, 75% to 125% would be $300k - $500k to add a dormer & front porch. That's crazy pricing!

We included spray foam insulation and new windows for the second floor as part of the specs the contractors have bid on (along with any new supply pipes being copper and adding more power and data/cable outlets to the upstairs). The plans for the upstairs are pretty complete & all the contractors have walked thru the house & given us suggestions on things to add to the reno. The guy we like best is the middle bid - he seems the most detail oriented and is on the same page in terms of quality of construction. For instance, he didn't try to sell us on vinyl replacement windows but suggested we use Marvin wood windows, and consider replacing the old windows with new construction units so we can make them taller without changing the framing of the walls much - it would give us more light.

Our RA is the one who said we'd probably only see about a 50% return on the renos. I judged that down to 40% because I'm sure when we start work we'll find issues that will increase the costs without adding value to the house.

Brickeye - it's true, location is important. We really like our town's relatively low property taxes - most surrounding towns are a little higher or a lot higher. Our street isn't as quiet as yours, but its patrolled by police at least once a week looking for speeders. The local Boys & Girls Club has a back driveway off of our road and so the cops treat it almost like a school zone. Unfortunately our road is well paved & straight, which usually makes speeders speed up but the cops have been making good progress on enforcing the 30mph limit.

So HollySprings - knowing that the numbers I have are vetted & we've already taken the steps you suggest - am I missing anything?

I'm in one of the lowest labor cost locations in the country and what you are proposing would cost at least 100K-125 here. If you can get it done for that little, and you have enough to have a good safety cushion if things start to go wrong, then I'd do the remodel and enjoy the property.

But, I'd check the zoning of the woodlands first and keep an eye on any proposals going in front of the zoning board forever. We backed up to 40 agricultural acres on one side of a train track that we always thought was too long and skinny to develop and that assumption proved to be wrong, despite the many protests we and our neighbors made to the zoning committee.

If the economy ever picks back up and they finish the subdivision, there will be 400 homes basically in my back pasture. Not ideal, but we have enough room (and I've planted enough trees) to deal with it. If your woods ever went away, would that change your opinion about staying there?

That's one of the chances you take, so think about 10 years from now. But, at least you'd have had 10 years of a more comfortable space!

Wow, I wonder why it would cost so much to build this where you are? I mean, there's no foundation work - aside from a few piers to hold up the porch. About 4 years ago we built a 32x28' garage with two rooms above it and that came in at $90k ... including a new concrete driveway. That was a ton of equipment in terms of moving earth (we built it into a hillside) and getting special laminated beams to avoid having any support poles in the garage, etc. But that was also in a low COL area.

You are right - there is always the risk that they would sell the farm & it would become new houses. I think that as long as the town's 1 acre zoning was enforced it would be acceptable. We do have a buffer of wetlands within those woods. Now and then I think about contacting the farm owner & asking if we could buy some of the woods from him. About a 50' to 75' swath would be lovely to keep preserved as woods ... IF they ever built houses there. I need to see if there's any liability for owning wetlands, though, because after the spring/summer we had I'd be leery of buying anything that could make me liable for being sued for any flooding.

Thanks!

I'm not sure what you have now and what you'll have after the remodeling. I'm envisioning you will tear off the top floor, reframe it for higher ceilings, add height to two existing BR's, re-do a hall bath, add a shed dormer.

It doesn't sound like you're getting any additional living area. What's *downstairs*? (Also sub-standard height rooms? Small kitchen? Powder room?)

How much goes into adding the front porch? Will you USE a front porch, or is it cosmetic?

How many estimates did you get? Licensed and insured contractors with permits pulled? That sounds awfully low for what you've described. I'd also expect this to be at least in the 100K+ realm depending on your location.

Chisue - the back of the second floor has a shed dormer already, so we won't tear off the whole second floor. We will tear off a big chunk of the front roof, though, almost all of it. They will have to reframe the roof in that area, add a new ridge beam, & tie the old rafters (on the back of the house) to the new beam. So it is 3 of the 4 upstairs walls that will be changed.

We are getting additional living area because the front of the house is now dead space - there aren't rooms in there today. Imagine a big, triangular attic space. We'll add about 330 sq feet (33' wide, 10' deep) to the upstairs.

Downstairs the house is great - the first floor bathroom is vintage (turquoise fixtures, I love that bathroom) and the kitchen was remodeled before we bought the house. It's been opened up to the dining room & adjoining breezeway which also has vaulted ceilings. The cabinets are oak, and I would have preferred cherry, but the layout is fantastic and I wouldn't trade it for the world. Ceilings downstairs are 8' & in good shape. And there is a large family room over the 2 car garage that is 1/2 flight up from the breezeway.

The only change I sort of wish for on the 1st floor is that the full bath was a powder room. But on the other hand, our guest bedroom is on the 1st floor & it's nice for my parents to have a bathroom to shower in without climbing stairs.

The front porch is about $10k of the reno cost. I don't honestly think we'll use it, but it adds significantly to the "cute" factor and getting more curb appeal is critical for me. I'll probably use it 3 or 4 times a year, and it will be a nice spot to rest in between working in the front yard.

LWO - we got 4 estimates. All licensed and insured, and 2 from design-build firms that will do the architectural drawings for us. 2 of the builders are recommendations from friends, 2 were found via Google/Angie's List. We're going to get one more from a builder who did an addition for a friend of ours.

10 years ago, in this same town, we did the following work for $22k:
Add 2 large gable dormers to front of house (8' wide each)
Add portico to front of house
Reside house + 2 car garage with CertainTeed vinyl shake siding & clapboard siding (shakes on front, clapboards on sides)
Replace 4 large casement windows with new Anderson units
Replace rotted sill (found when they were working on the portico).

About 7 years ago (on that same house) we also had a 1st floor bath redone for $10k - which did NOT include fixtures but did include moving the plumbing for the sink & shower. I purchased all the fixtures ahead of time.

So, allowing for inflation & the larger scope of this project, but also factoring in the cost of the siding in the other project, I think 2x to 2.4X is reasonable. Which is sort of where the contractors have come in. Right now we're leaning toward the guy who was the second highest in price, just because the work we've seen him do is pretty amazing. He's done some built-ins as part of an addition that blew me away - it was like the wood had no seams. The addition was fine, but the detail work is what usually impresses me the most & this was really well done.

OK, you are getting more useable space upstairs. Good! That part makes sense to me.

There are many ways to add curb appeal that don't cost $10K and that won't darken the interior of a house. I'd look at other options for your front elevation.

Do you need to re-do the HVAC to add capacity or do any plumbing? You'll be re-roofing.

I don't think we need to redo HVAC - we have a boiler now & the whole upstairs is on one zone. The better insulation of the spray foam will balance out the increase in space so the current boiler can handle the load (or so one contractor said, the only one we thought to ask). We don't have central air today & don't plan to add it. It's not common in our area to have central air, unless you live farther out in the newer suburbs. We thought about it, but it's really expensive if you have hot water heat b/c they have to add ducts everywhere. We figured we could pay someone else to install our window units for many years before it came close to the cost of central air :)

It sounds like you want to stay. It's a pain in the neck to move and there are always other factors involved other than financial. We ended up remodeling our home even though it made more financial sense to move. The home I really wanted was just out of my price range and we did not want to struggle for vanity home features. I remodeled instead and now have the prettiest house on the block. I will never get my money back but I am at peace with my home. Dormer your house and put on a pretty porch. You will be very happy when the work is done.

My husband and I wrestled with this same decision. In the end, we remodeled with an addition. For the amount we spent on the house and remodel, we could have bought a larger house that maybe was updated, but we love our location and getting to choose the layout and finishes was a big plus. I'm north of Boston so inventory in low. I've included a link to the blog I kept during the process.

Here is a link that might be useful: My Blog

Hey Kittenkat, We might be neighbors. I'm just outside of 128 & kinda close to Rte 3 ;) I think it's amazing how moving 4 miles in the wrong direction around here can add 20 minutes to your daily commute. It's a big part of what affected our decision to stay put.

Looking at your blog I see y6ou chose the Bancroft faucet for your master bath - which I also fell in love with. Off to go steal some ideas from you :)

How long do you plan on staying in your current house if you remodel? DH and I went through this conversation a couple of years ago and we decided to do a whole house reno instead of moving. We weren't ready to downsize, we love where we live, and we are in an extremely expensive housing market. We decided we will stay in our house for another 10-15 years (already been here for 22 years) and if we moved we wouldn't get what we really wanted anyway and we couldn't afford to move and to renovate because of housing costs. So staying and renovating made sense.

Oh and our rambling conversations is how we wound up making our decision.

Hi blfenton,

We plan to never move again. I've said that before, but I think this time it might stick because:

1 - I'm near the corporate HQ for the company I've worked for the last 10+ years
2 - We're close to the hub of activity for DH's career
3 - We're within a 2.5 hr drive of family (both sides)
4 - This is our 4th house & we bought it when returning to this area from another state. So we know what geographical area feels like "home" and this is it for us.

Yesterday I pulled the best 5 listings in the 3 towns near us & we did drivebys on them. The homes ranged from 120k to 180k more than what we could sell our house for. None of them made us want to see more. 1 backed up to wetlands, you could see the swamp from the street. 3 had no yard (despite having almost an acre of land) it was just really steep. and 1 was on an un-paved road which means it would be plowed last in the winter, and be muddy as heck in the spring.

I wish we were on a cul-de-sac but I've come to the conclusion that I wouldn't trade cul-de-sac living for the buffer of woodlands & farmland behind us. Sure, that guy might sell & someday that could be a development. But until then I can enjoy it, and he looks healthy ;)

It sounds to me like you have done your "financial" and "intelligent" homework on the move/renovate decision and renovating is winning. It also sounds like "emotionally" you want to stay where you are and to renovate. I'd say you have made your decision and just needed to put it in writing which you have done here. People have pointed out things for you to think about and you have already done most of it.

Renovate seems to be the route that you want(should)to go so that's where I'd go. This way you can get what you want in a location that you love.

I've been there, and I know it's a hard decision. As other posters have stated, sometimes it's not just about dollars and cents. There can be intangibles...property, neighborhood, schools, etc. We've waffled back and forth for the last 10 years with our current house, which was built in 1949. I've house hunted, and then met with architects. In the meantime, we fell in love with everything BUT the house, and managed to get by with our cramped spaces (family of 6). A few years back we got several bids to add on/remodel and the prices were so high we didn't pull the trigger. We were going to move, but couldn't find something that would be what I knew my current house COULD be (sound familiar?) Anyway, I'm happy to report that we're currently in the midst of our addition, and the building costs even came down considerably due to the recession. This is our "forever" house, so I plan on enjoying it for the next 25-30 years!

"couldn't find something that would be what I knew my current house COULD be (sound familiar?)"

Yes, this. This times 1,000. Technically I could sell this house, add in $150k and buy a new house that would equal our renovated home's amenities on paper. But ... all the new houses in that price range are plain Colonials. If we do this reno we'll have a house that evokes a Craftsman style home. Plus I really do want to live here forever and those new Colonials put all the bedrooms on the second floor. We have a first floor bedroom & full bath and when I think about growing old here I like the security of that. Plus it works well for my parents when they visit (we're closer to their cancer treatment center than they are, so sometimes after treatments they come here to recharge & drive home the next day).

Is it wrong to wish that someday, when we're both at work & the dog is at daycare & the cat is stalking the bird feeder in the yard ... that a massive tree takes out the whole house & insurance pays us to build a new one? It's probably wrong, but is it "cardinal sin" level of wrong?

Part of my hesitation/indecision is that I'm wrestling with regret. When we bought this house we were approved for $75k more than we spent, but I didn't feel comfortable spending that much on our income. Since then DH changed jobs, we both got raises, and bonuses this year were really good. This is all great news BUT it means that if we'd bought a higher priced home 2 yrs ago we really could have afforded it and we wouldn't be looking to spend another $75-$85k on this house. In hindsight buying the cheaper house was a bad financial decision.

I probably need to make peace with the fact that yes, I screwed up & we should have gone for a pricier home when we purchased. It would have saved us money in the long run, instead of buying a cheaper home that needed renovations. I'll stop rambling now!

Don't regret that decision another moment. I think it was quite smart, even frugal. Who knows? You could have been at the other end of the spectrum--one or both of you losing your jobs and having a mortgage out of reach. You never know. Having been at both ends, I was grateful afterward that we underbought our house, and when things went from really good to bad, we didn't have to move, and could still enjoy things like family trips. Whereas my husband's business partners were having to sell their "dream homes." We were just patient, and eventually things went back to good again!
It sounds like you are ready to remodel so good luck!

I was also grateful to have underbought 20 years ago. There were a number of times when we were glad to have a small mortgage that we could easily afford rather than a bigger one that would have been a struggle to pay. When we could afford to move, we looked at a LOT of houses--too many to count, and even thought about building. Last year we renovated our little 1960 ranch into a larger house with a layout that we love. We added 425 sq ft, including a master bath and walk in closet, a large kitchen/dining area, and a mudroom. We also added onto the garage and replaced the roof, siding, and all windows. We got exactly the house we wanted and we're happy with it and plan to stay here for the duration. If we were thinking strictly about the financial end of things, we may not have done it. But, we love the neighborhood, we have a half acre lot, and the kids are well established in the school system here. We plan to be here for at least another 20 to 30 years, well into our retirement.

EngineerChic,

I am new to the forums as we are about to break ground on our own extensive renovation to a 1940's brick home. I just wanted to say we went through many of these conversations and "what if" scenarios. I may change my mind after going thru with the actual thing, but I think it sounds as if your heart is saying to renovate and stay. And I think if you put your heart and soul into something, when you look back years later you'll see it was worth it.

Could moving into a more finished home now be more "financially efficient"? Perhaps. It will save you lots of hassle I'm sure. But again, the way you've strategically laid out the options is exactly the way my mind works too (not surprising if your an engineer)...and I think you make good arguments. Sometimes in life you just gotta "seize the moment" and do it or you'll talk yourself down off the high dive. So I wish you luck with your decisions no matter what!

EngineerChic - I love those faucets! They're similar to the ones Restoration Hardware has but for much less online. BTW, don't regret your decision to buy what you could afford at the time. Too many people over spent and look where that got them. Good luck and let us know how what you decide.

An Update:

We are going to remodel and we're doing a bigger thing that we initially planned. Originally we thought about adding a dormer to the front of the house. Estimates came in & things looked good ... until I mocked up the house in Google sketchup and realized that the roof pitch was too shallow to be seen from the road.

This may be hard to explain, but our house sits up out of the ground by 40" (5 steps). And the front yard slopes toward the street a little bit. So in the end, if your eyeballs are 5' off the ground (at the sidewalk) and you looked up toward the proposed new roof, you are looking up at a 5:12 pitch. Our dormer roof would have been 4:12, which means you would not see the roofline, and that kills the curb appeal of a Cape (IMO). I drive by a house that suffers from this and I really did not want that look.

As we were working on plans the drafter suggested, "Have you thought about replacing the whole second floor? It probably wouldn't cost that much more ..." His suggestion was a good one, though he was wrong about the added expense.

We are replacing the entire second floor. It will cost about $15k more than doing the dormer. BUT - we get 2x6 construction, higher ceilings, and a steeper roofline (14:12 on the sides, 7:12 on the dormer). And we've reduced the risk of "Oh geez, we didn't expect to find this problem so we need another $5k" because we aren't tying into old structure much.

I kept looking at other options - going to see other properties on the market that are more expensive and even looking at some tear downs to determine if we should just build a new house (undeveloped land is rarer than hen's teeth here). I've tried the logic of, "A lot of people live in less-nice houses, get over yourself." And I know we are "losing" money b/c if we had to sell we couldn't recoup the cost.

But, we're paying cash and I don't plan on EVER moving. I love our yard & the farm behind us. Our commutes are great, and although I wish we had less traffic on our street the cops are out there enforcing the 30mph speed limit pretty often (we're near some athletic fields, so kids walk or jog here a lot & the police treat this area like a school zone).

Fingers crossed that we don't regret this, but I'm really looking forward to the new look on this old house :)

Here is a link that might be useful: Cape to Bungalow Inspiration

You sound like you're in a great spot. And, please, don't feel you made a bad move by being prudent and "underbuying." You were wise! If more people acted like you did, the US might not be in this terrible economic mess. Like you, I'm in a situation where I think I'll be where I am for years--and the next stop will likely be a nursing home or the great beyond!

Ripping off the roof and doing a complete second story rebuild will put you into the situation of a teardown being more cost effective now. Any remodel contractor that says anything different doesn't know much about new construction numbers vs. remodel.

one more vote for the remodel (love the inspiration pic!)

agree with the others that think you made the correct decision *at the time* when you purchased....

we ended up remodeling and do not regret doing so...we are ideally located to our business and while i realize we could have gotten 'more house' were we willing to commute, our time was just too valuable for that

Polie & Desert_Solitaire - Thanks! I do love my commute, I was away on business for several days and I noticed a couple construction projects near us are making progress (one person's garage is almost finished and another person's new garage is fully sheathed & Tyvek-ed). I'm still nervous, but also very excited and hopeful.

LWO - with all due respect, anyone who suggests a complete teardown as an alternative to a rebuild does not understand the difference between paying for what you can afford versus taking out a huge loan.

-eChic

Demolition of an existing second floor and then putting an entire new second floor on top of an older home will cost more than tearing it down entirely and starting over. Melding new and old is more difficult and labor intensive and that equals more costly. And you also will have to bring things up to current code that might otherwise have been grandfathered in, such as the stair access, egress windows, seismic or high wind requirements, arc fault breakers, etc.

So you are suggesting that we could demo the entire house and rebuild from the existing foundation for less than $66/ square foot?

The price per square foot to demo and rebuild the second floor is $137. Allowing for the slightly larger footprint of the first floor (this is a Cape) the price would have to be $66/sq foot for the price to be the same as just replacing the second floor.

Building a new second floor does not involve a lot of melding old with new. The only thing we have to tie into are the water supply line for the replacement upstairs baths, the waste stack, and the existing floor joists for the second floor.

Please explain where you have been able to build for $66 per square foot. I'd love if you or LWO can prove me wrong and show me where/ how to build an entire house for the price of half a house.

EngineerChic, it really sounds like you love your current house, so I think you're making a choice that's right for your particular circumstances.

If you're gotten similar price quotes from several general contractors, I doubt they are ALL lying to you. Sure, one could get a lowball quote from an unscrupulous GC, but I think it would be unlikely (albeit theoretically possible) for multiple GCs to massively underbid for the same job. As you said, for your particular house perhaps there is less than typical melding of the old and new required, and that could be making the price more reasonable.

I don't know if the prices are realistic in your area, multiple quotes will tell you that.

I will say, that I think some posters have different types of markets going on where they are for construction than others.

Conceptually I get what you're saying, but in my area new construction isn't an assemblyline process, new builders seem to charge a significant premium for their services even with "standard" lower quality finishes

In my area, second floor tear offs of ranches and capes to be replaced with full height second floors are very commonplace and much more cost effective than complete new builds.

Granted, with complete gutting of the first floor it may not be significantly cheaper,

I did a bit of research this morning to be able to give you better hard numbers for your area rather than just using my own experience with numbers from my area.

In 2011 in the Boston area, using industry reported numbers, the midrange cost of an attic bedroom update was 53k (x2). The cost of a bathroom addition 42K.(counting as 1/2 because you are adding space which is beyond just an "update") To have a roof replaced was 23K. Siding replacement was 12K for vinyl.(1/2 since you're only replacing the top half.) To replace 10 windows with vinyl was 12K (1/2 since you are replacing maybe 4-5 total.) 15K for a deck/porch. To get the required r-49 insulation you'll need 7" of closed cell foam and that will cost around around 6K. You are at 183K for the project and it really hasn't addressed the full complexity of a complete second floor tearoff and rebuild. 200K would be a realistic nice round number to work with. If you are talking a 900 square feet second floor, that works out to around $222 per square foot for remodeled space.

RS Means construction data says that 2010 average Boston new construction pricing was $130 per square foot (not including land) for "Residence (above average quality tract home) Two-story, wood siding, composition shingles, 2½ baths, balcony, two-car garage, 2,400 SF. Basement, landscaping, fencing, and deck not included." That works out to 312K for a complete all new both floors 2400 SF house.

I'd say your remodel quotes were pretty lowball compared to industry average. Change orders as the project progresses will be likely. Yes, adding another 100K to the project isn't chicken feed, but it is only 1/3 again more costly than the remodel of half of the home. Look at the results you'd get from that vs having a part old and part new.

Here is a link that might be useful: Boston area remodel costs

Thanks, LWO, I appreciate the info! Now I see the disconnect.

When I looked at what is included in an attic bedroom update (from costvsvalue.com, which is where I assume you got your prices) I see:
- Convert unfinished attic space to a 15-by- 15-foot bedroom and a 5-by-7-foot bath- room with shower.
- Include a 15-foot shed dormer, four new windows, and closet space under the eaves.
- Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space; provide electrical wiring and lighting to code.
- Retain existing stairs, but add rail and baluster around stairwell.

So that $53k includes constructing a bathroom, replacing a large portion of the roof (the dormer), applying exterior siding to the new exterior walls you created with the dormer, the windows, and the insulation. To pay an additional $23k for a new roof plus $6k for vinyl plus $6k for windows and $42k for the bathroom is basically double counting everything.

If you double it to be 2 15x15' bedrooms and 2 bedrooms you wind up at $106k, which is close to where we are at. Now, we're adding on a farmer's porch so perhaps we got a great deal but I don't think it's unreasonably fabulous. The GC we are going with was mid-priced, he was the 3rd cheapest of the 4 bids I trusted (or second most expensive, depending how you look at it).

I think the error is that you underestimated the work that was included in that attic remodel estimate. It's fairly extensive, and encompasses the other line items you added on.

Hadn't checked on this thread in awhile, and I'm excited for you EngineerChic and your upcoming remodel. For what it's worth, we are about T-minus 4 weeks to being done from our addition/remodel, except for some exterior cement/rock work which we'll have to wait until it warms up. And I will say, dollar for dollar, it is cheaper to build new, and I even quit teaching these past two semesters to watch every penny and manage the project directly to help with costs. A quick comparison, we will have added on about 1600 sq ft of additional living space, plus a 750 sq ft garage (We have left one room unfinished, however). In the end, we will have spent 225K, (about 15K more than our propsed budget) and our house will now be about 3800 sq ft of living space plus a garage. Conversely, a couple of years ago, my neighbor tore down their exsisting older home that they bought 6 years prior and built a 6500 sq ft homeand an additional 3 car garage for about $660K. Dollar for dollar their build cost less, however, in the end, we had upwards of 200K to spend, not 600K. For us, it ended up "costing more," but we don't have a huge mortgage and our home will fit our family of 6 perfectly, as we are transistioning from everyone living at home to currently having only two at home full time. Good luck!

Congratulations on your decision! It's a tough one and there are so many factors to consider.

Time you plan on staying in the house is crucial. Also in our area, one major consideration is property taxes. If we were to raze our house and start from scratch we'd be assessed at current house values - more than doubling our current annual payment.

That said, if you are not careful with your remodel and your project turns into a "might-as-well project", you will regret having not razed the house.
We bought our first house almost 18 years ago and 12 years ago we did our first project adding a master bedroom suite. Costs got way out of control as we were both working crazy hours and just left everything to an expensive (but reliable) contractor. For example, the contractor billed us for the hour it took to pick up the light fixtures at a local store because I couldn't make it there before it closed. When I look at what we spent on that project (including the ridiculous architect fees) it made absolutely NO sense and we were silly to not have built from scratch despite like our neighbors did (although still we probably couldn't have afforded it).
Fast forward 12 years - Fortunately, we didn't need to sell the house and our neighborhood grew and home values sky-rocketed and miraculously remained fairly stable during the housing burst. That master bed/bath has been thoroughly enjoyed and our house has appreciated far more than we ever expected so we are by no means at a loss and we preserved our tax base unlike our neighbors who built new.

We are now going to update the last part of the house (a new kitchen/family room and guest room). We very carefully considered all the numbers and if we are careful (unlike last time) to control costs then it makes complete sense to remodel rather than rebuild. Of course, I'd love to build a shiny new energy efficient house on our lot, but it's still way out of budget and buying the equivalent of what we will have after the remodel in our market is simply unaffordable. If I look at what we've spent on the house over the 18 years it will total a little less than what we could build it for new now, but we have enjoyed it for 18 years and did it on the timeline that we could afford, in a neighborhood that we love and that our kids really enjoy.