In general, as long as you are moving up in the size of your home and staying in the same vicinity you should do well, so your thinking is on track in that respect. The disadvantage right now is for those that are downsizing, because in general they have taken a similar percentage hit to a larger value home.
Currently in Alexandria City, there are 31 single family homes in the $400K-$600K range, while including Fairfax County with an Alexandria postal address adds another 179 possiblities. There are options out there for your growing family to explore.
Best of luck! If you have any more questions please feel free to drop us a line,
AJ Heidmann, ABR, CRS, e-PRO
Cell 703-474-1260 Fax 703-518-8314 Toll Free 877-727-3631
Coldwell Banker Residential Brokerage, Old Town Alexandria
Sell low, buy high ... big problem. In other words, if you do sell, don't wait to buy.