It's a perennial question and one so difficult it makes you wish there were a Solomon of home remodeling to help you decide.  But unlike Solomon, who thought it best to chop the baby in half, there is no way of doing a little of both.  Do you raise the white flag and move from your misery-inducing house?  Or do you start remodeling in order to make your humble heap not only livable but a place of joy?

Costs First, Intrinsics Second

One way to approach your "fight or flight" question is to first eliminate all subjective aspects.  

Initially forget about your emotional attachment to crown moldings, your charming (or awful) neighbors, or the Whole Foods you can walk to down the street.  

Begin with the financial aspects of selling a house (and establishing a new residence) vs. the cost of remodeling the home.  As a standard, we will look at selling at $300,000 and buying another house at the same cost.  Once you have those figures hammered down, then look at intrinsic values.

$23,650:  To Sell and Buy Another House

Selling your house and buying a new one will cost you.  This does not include squishy factors such as whether you sell your house for less or more than you paid for it.  The "squish" is determined by the market and by your negotiations with the buyers.

But what does the very act of selling, re-buying, and moving to another home cost you?  Between $15,800 on the low end and $29,500 on the high end, averaging out at $23,650*.

• Sell:  Selling your house means paying between 4% to 7% of the home's purchase price for the "parade of taxes, commissions, and fees," according to Realtor.com.  For a $300,000 home, this is between $12,000 and $21,000.  Another estimate from a Colorado real estate agent:  $1,687 + $16,500 (real estate fees) =  $18,187
• Buy:  When you buy another home, one of your biggest expenses will be mortgage closing costs.  One Bank of America estimate for a 30 year fixed-rate loan, with a $5,000 down payment, is $8,515.  A lower, and possibly more realistic, estimate from BankRate.com indicates $3,808 in closing costs for the same loan, based on national averages.  Also, a reader reminded me that moving costs are inescapable:  you absolutely have to move every possession, down to the last toothpick, out of the sold house and into the newly purchased house.  For a 3 bedroom house move, CostHelper estimates $600 to $900, but I would "up" that to $1,000.

$23,650:  How Much Remodeling Will It Buy?

Now that you have determined how much it will cost to sell your home and re-purchase another one, you can transfer those hard costs--costs that you cannot escape--to the remodel side.  

One way to look at it:  how much remodeling can I buy for those inescapable costs?  

You want to avoid looking at low-value home remodel projects like decks, home office remodels, and sunrooms, since those rarely trigger owners to desperately ditch their home and buy another ("Honey, I just can't go another day without a deck in back!"  You get it.).

It's usually those areas associated with daily activities that drive people crazy (kitchens, bathrooms), as well as things dealing with the house envelope (windows, siding).

Here is what $23,650 can buy you in a home remodel:

• Mid-Range Small Bathroom Remodel With About $7,000 Left Over (Project Cost:  $16,724).
• Mid-Range Roof Replacement + Front Door (Fiberglass) Replacement, With About $3,000 Left Over (Projects Cost:  $19,528 + $2,926 = $22,454)
• Mid-Range Replace 20 Windows With Vinyl Replacements, With About $1,200 Left Over:  (Project Cost:  $22,396)
• Mid-Range 1/3 the Cost of a Basement Remodel (Project Cost:  $65,442)
• Upscale Fiber-Cement Siding Replacement + Garage Door Replacement, With About $6,700 Left Over (Projects Cost:  $14,014 + $2,944 = $16,958)

Intrinsic Values vs. $23,650

Now for the ultimate in "squish":  intrinsic values that you cannot put a dollar price on.  I will not even attempt to put a price on values such as neighbors who have a child your own age (staying and remodeling) or a house you're not constantly fixing and worrying about (moving to a newer place).

So, keep that $23,650 figure in mind when you consider intrinsic values that matter to you:

• Neighbors:  Are they great, bad, or neutral?  Usually, neutral is about as good as you can expect.  If you have a terrible neighborhood situation, such as drug activity or a grow house, you might gladly pay $23,650 in sell/buy/move costs to get into a better neighborhood.
• Access to Work:  Do you place a high value on short commute times?  Or do you not mind making the long haul every morning?  Your choice.
• Walkability:  If you're considering a new area, WalkScore rates residential walkability in terms of transit opportunities and ability to conduct errands on foot.
• House-Frustration:  This goes both ways.  Staying and remodeling is a highly frustrating and slow activity that can push some people over the edge.  But the disruption of selling, moving out, re-buying,  and moving in might be equally frustrating to others.

Summary

My $23,650 calculation really isn't all that important; you can argue it, shoot it down, or support it from all sorts of angles.  But the point is that you can arrive at a figure informing you of how much it will cost to sell and re-buy a home, and fairly accurately, too.  Remodeling costs are more difficult to pin down without speaking to contractors and getting estimates, but it's possible to come up with price ranges.

The important thing is to begin with costs first before dealing with intrinsic values.

Footnotes

* = The "very act of" selling or buying a house--hard costs such as commissions and fees--can be squishy, since buyers and sellers are free to negotiate who pays for what.  Plus, fees vary according to where the house is located.