Thanks very much to all who have replied! I see some similar trends in the analyses below. To answer a few questions:
We do love our home and our neighborhood, and have looked for the past several weeks for homes in the high 400's (still in Central Denver), and are simply not seeing anything that we like. It appears that while there are "deals" out there, they would require us to move to a less desirable neighborhood or to a house that needs quite a bit of work. Every time we come home from house hunting, we say"we really love our house - I just wish we had an extra bedroom." That said, I've also begun looking at the numbers for resell after a master addition, and they are not that different from a sell/buy situation. Since they both, in essence, come out to be the same, it's been a tough decision for us.

It sounds like your goal is more living space for your family. Either solution is a viable one in this market. In the case of adding on, you will be faced with some construction and quality-of-life hassle. However, if you love your current home, this will be worth it ultimately.

On the other hand, this market is prime for buyers moving "up" into larger homes. It is still a soft market and there is good inventory. For these reasons, It isn't the easiest time to sell, but, you do have the potential to save 5-10%(sometimes more)on a larger property.

Hope that helps!
Mandy

I think Jeff is right. Do you like the home and the neighborhood? if you do like it build and stay.

If the new bedroom will allow you to stay in your current home for another 3-5 years, then it would be a good investment. If the house will still not meet your needs after doing the Master suite, then by all means, do the remodel. A beautiful new master and updated master bath is a great invesement. Central Denver is always a good investment, too. It was not hit as hard as other areas. So, when you're ready to go, you should be able to sell! If you need more information, please let me know! jamie@kimbroughproperties.com

Hi,
The REAL answer is "do you like your current house and neighborhood"? By tyhe time you factor in construction costs & permit brain-damage - you can probably 'breakeven by listing and buying another home in a more desirable location with the floor plan you like instead. Which option sounds like LESS aggravation to you?

Jeff

Peyton,
I am not sure which neighborhood you are in in Central Denver but when it comes to additions what you need to decide is do you love your neighborhood and how long would you stay if you add the space to your home.
For all the negitive press that we hear everyday about the market...Denver economist are saying most areas will see a 6% increase in our homes this year so if you want to stay where you are and remodel go for it!!! If you are contemplating living closer to work, a different school districts or more ammenities in a neighbothood you might want to sell because other areas will also going up 6% and we are still seeing mortgage rates 6% and under but due to economy those will probably rise a bit higher this year. You can probably get a better deal right now on a home than waiting a year. So the question to you is how much do you love your home and neighborhood??? If it is where you want to be abd you have eveyting you want Stay and remodel if you aren't sure check out some other areas to help you make up your mind. This marketing is challenging but not bad but if you sell wisely you can buy wisely right now. Call me if you would like to talk about specifics.
Karyn

You are right, there are a lot of factors to weigh. The most simple factor is never put money in on your way out. Always remember that you will never get back dollar for dollar what you have put into the home when the appraisal is done. As you said, the home was gutted and updated 3 years ago so you have already made it a nice place for someone else to live. If the value of the home has not decreased much over the last period of time, then it is a good time to sell. If the value has gone down considerably, then you can always add on and stay four more years until the market comes back.