Congratulations to you for being in such a desirable position, able to move up into a better house- I, for my part, would be happy to just get into a house period, but it looks like my generation is screwed.
My only comment would be that Murrieta/Temecula/Winchester are NOT priced with any sanity when you consider where they are located- just because the price is lower doesn’t mean that it isn’t vastly overvalued.
I would consider what would bring more joy to my way of life- a bigger house and 2 hours on the highway everyday, or making my life fit into my current house, and having 2 more hours per day to spend with family. Whichever one works better for your family, there’s your answer.