House construction/house purchase or expansion of parental home - decision making!

Hello forum members,

we have been thinking for 2 1/2 years now about what is the best decision for us.
Maybe you can help a little with your opinions.
I will try to briefly explain the facts:

Currently, we live as 3 (from July as 4) in the upper floor of my parents' house.

Option 1:
We build in the new development area.
Costs will be about 400,000 Euros (there have already been talks with the developer).
We would then have a plot of land perfectly sized for us, the house would be "a bit too small" for us at that price, but acceptable.

Advantage here: we would live in the village where there is a daycare/preschool/school. The infrastructure is somewhat better than at the current place of residence (which is only 3 km away).
Some young families currently live there (nice for children).

Disadvantages from our point of view:
We would "leave behind" my parents.
They can still maintain the house at the moment, but that will not work forever.
We would also find it nice if our children grow up with their grandparents.

Another "disadvantage": we would have more neighbors. Currently, there is only one - which we basically do not mind :)

Option 2:
House purchase. Unfortunately, the market currently does not really offer much here.
In the last 2 1/2 years, there was only one house that "interested" us. In the end, however, it was not the "right" one for us.

The only advantages we see here:
It is already finished. Everything is done and ideally cheaper than a new build.

Disadvantages:
We cannot estimate what will be on the market.
In what size/plot size/location, etc...

Option 3:
We stay in the parents' house and make some "improvements" here.
The parents' house was built in 1960. An extension was added in 1980. In that process, there was a new heating/windows/doors...

Advantages:
A clear advantage here is definitely the lower costs and thus the "more relaxed life".
We would invest a maximum of 200,000 Euros to make it nicer for us.
We wouldn't have to worry about "money" as much as if we were building.
We would have my parents here and could support them, the children would grow up with grandparents.

Disadvantages:
It is located on the main street/village entrance (therefore speed is usually faster than allowed) - according to a current study, 2000 cars drive by here daily.
Also, there are hardly any children of the same age in the village.
Daycare/preschool/school are 3 km away - you have to drive.
Currently, we would need an additional room. We could get that on the ground floor and it would be used as the parental bedroom.
All other rooms would fit on the upper floor. We would have to live with that until my parents eventually pass away and we have the entire house for ourselves.
The plot is "unfortunately" very large.
That also worries me a bit. Currently, we all maintain it. If my parents are no longer there or able, it will look different...

Whether we want to stay here for the rest of our lives (especially because of the size of the house/plot) is also the question. But you can always sell a house :)

Now I also ask myself:
"Is it worth putting so much money into an 'old house'?"
Certainly, we can make the upper floor chic, but unfortunately the house is also a bit "built around".
But do you have everything as you want it in a new build?
You probably won't be 100% satisfied with any solution.
Every option has advantages and disadvantages.
What would you recommend to us, and especially why?

I hope I could at least give a small impression of our situation and look forward to helpful answers.

Best regards, Mery

The plot is "unfortunately" very large.

But (concerning the buildable part) still too small for option 3a, building your own house on the parents' property (possibly for the parents as a retirement cottage, so that the current house becomes entirely available for the young family)?

That would be our first choice. Unfortunately, the responsible building authority immediately put a damper on that, since we are located in the outskirts of the town and construction is therefore almost impossible.

Who owns the property? If you are not yet listed in the land register, would the parents transfer the property to you and would siblings have to be paid out in some form? Transfer with all the ifs and buts and the risk that in the event of your separation, the property would partially belong to the in-law/ would have to be sold or something similar?

Selling and rebuilding with parents?

The property/house is paid off and currently still belongs to my parents.
However, my father has wanted to transfer it to me for a long time.
There is a brother who then has to be paid out proportionally.
Of course, we still need to clarify what happens in the event of a separation.
But that wouldn't be any different with buying/building a house...

:
That option also existed before.
We discussed it with the developer. So the option was to put a multi-generational house on the plot in the new development area.
Unfortunately, that is really unaffordable for us. The risk is too high for us.
Especially since we probably won't get much for my parents' house due to the location (small village/main street... etc.). Well, we don't know yet. But overall, the risk for us is too high considering the costs.