Faced with similar situations, many Island homeowners may hear the catchy Clash tune bouncing around in their heads.

The big question is whether to remodel a current residence, or take the plunge into Hawaii's hot real estate market in search of a more suitable place. But where does one start?

"Prioritize what's important to you by making a list of 'must haves,' and another of 'nice-but-not-so-necessary' features," says Stephanie Gieseler, a Realtor with RE/MAX Honolulu.

If your only wish is an extra bathroom, and there's space to do it, remodeling is a probable choice. However, when loftier dreams include a gourmet kitchen, bigger bedrooms and an open floor plan, there are more things to consider.

"You also need to think about your current lifestyle and future plans," Gieseler says, "taking into account how long you'll be living in your renovated home or next home." And like most big decisions facing homeowners, it all boils down to weighing your needs and finances.

"A mortgage specialist or financial planner can help you determine if you qualify for the additional mortgage to finance improvements or purchase a new home," she adds. "You'll also need to talk to an architect to determine what you can legally do with your property, and a contractor to get a quote for those 'must-have' improvements."

According to Danny Graham, president of Graham Builders, skyrocketing home prices and lack of inventory mean more Island folks are opting to remodel. In many cases, it's simply impossible to find your dream home right now, even if you have bottomless pockets.

"A lot of people are remodeling because their kids are coming back home to live, or they're simply finding they've outgrown their existing home and need more space."

In many of these cases, the location may be ideal and there's room for expansion, so remodeling makes sense.

Contractors and Realtors agree that location and property size are the basic elements of creating your ideal abode.

"We see old homes sitting on land in town and you would think there's gold under the house," laughs Graham. "If you like the location, land size is sufficient, and you can afford to remodel or rebuild, you can create your dream home."

Then there's the question of whether to remodel or rebuild.

Graham says if the home is in bad shape or your needs have significantly changed and you want more than just another bathroom, it may be wise to start from scratch.

"In these situations, it might be best to rebuild, since from a cost-per-square-foot basis, remodeling is more expensive than building a new home," explains Graham. "With remodeling, you must demolish by hand to protect what you're keeping. A good contractor wants to match what's existing. If you don't match the old with the new, it looks just like a pimple on a house." And that may leave you worse off than before.

Here are some questions to ask yourself when deciding whether to remodel or move:

• Do you like the functionality of your house? — Can you live with the floor plan?
• Do you like your location? — Will moving to a new home mean more time in traffic?
• Are you willing and able to live in your house during remodeling? If not, where will you live? Will you be able to find a suitable rental unit in this tight rental market? If you live in the house during remodeling, can you handle the dust and noise of construction?
• What can you afford? — How much will it cost to make the changes you need?

When making the 'remodel or move' decision, homeowners will also want to look at potential long-term financial opportunities.

"A Realtor can help you decide whether adding improvements to your existing home is wise, given the prevailing property values in your area," says Gieseler. "If you can afford your dream home in the neighborhood where you want to be, it's a no-brainer. It's much easier to move into a ready-made home than to live through a major renovation project."

But Gieseler cautions that you need to be sure your dream home actually exists. And in this booming real estate market, dreams are not easily fulfilled.

"If your needs and wants are very specific, it can be hard right now to find an existing home on the market, regardless of how much you're willing to spend," says Gieseler. "Sometimes when you know exactly what you want, building it from the ground up might be the best way to 'have it all.'"