Seeking input on home dilemma: Modify or Move?

[Great-Kazoo]

You sound like you're discussing the same thing we are. Already having a full 2nd story (full bath, and bedroom) going higher isn't on the radar. ADA... already there for some things, extending out back another 1500 + sq ft is doable. BUT realistically an open floor plan is something we'd prefer.
That brings us to other options

1: Become snow birds, upgrading the house for when we're here and traveling dec-feb. Downside to that is we're still stuck with a small shop (under 1k sq ft. Sometghing the spouse and i agree needs to be an easy 40 or 60x building

2: sell this place, relocating out of state.

For us there's some family living here. Our daughter live in (GASP) CA which isn't on radar as new residence. So there's no grandkids down the block or a short drive holding us here.
There is however a solid group of friends we consider extended family. Moving from such a great group of people would be the same as moving away from blood relatives. Not to mention the network i've built up 3+ decades

For you unless the grandkids are down the block, why stay. Can you get something turn key that meets your demands by selling existing home, without going back too deep in debt?

Something you might consider (what my spouse suggest for us) with so little a mortgage remaining. Find what you want in a home, use the equity from 1st to buy second. This allows you to move at your pace, not the new owners. Then sell home 1 paying off the note on it and left over $$ to cover 2nd