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But when you're faced with a home that falls short, should you fix up what you have or sell and buy something new?

Many homeowners believe it's cheaper to renovate than to build, but on a per-square foot basis the reverse is usually true. That's because you often don't know what the physical constraints will be in an existing structure until the process is underway.

In addition, plans and budgets often change mid-stream, making the process more labor-intensive and challenging to manage in terms of costs, time and logistics.

On the other hand, renovating an existing structure rarely encompasses as many square feet as building new. That's why fixing up your home can be cheaper on a total dollar basis. And if you're lucky, you'll be able to live in your home while it's being renovated.

Here are some things to think about before you make your final decision.

First, how much additional space do you need? Do you need an extra room or two, or is the home way too small to accommodate your family? Do you need extra space long-term, or just until a child goes away to college? Does everything about your home fall short, or just certain rooms--such as the kitchen or bathrooms? Will overhauling those rooms greatly improve its livability?

Take a critical look at your home's physical condition. Is your home in good structural shape or does absolutely everything need to be replaced? Can you live there through a renovation? It the layout workable or totally inefficient? Is there room to expand on the lot and if not, can the existing foundation handle a second floor? Will you need to jack up the house and pour new footings?

Next, think through how you're going survive your renovation. Will you live in a place while you work on it or somewhere else? Is it just you and your spouse or are there little children underfoot? Does disorder unnerve you or can you take it in stride? Are you prepared to make changes midstream or do you want everything perfectly planned out?

Finally, take a long, hard look at the numbers. How much can you spend on your renovation? How firm is your budget and how far will it really go? Can you afford a lengthy stay in a rental apartment or hotel while your current home is under construction? Or, will you be moving in with Mom and Dad?

Of course, buying a new home that's being constructed can run into problems as well. But at least you know there's an end number that doesn't move around a whole lot.