Which choice is better, tear down my existing house and rebuild, or renovate?
When you are stuck between two choices, you need to weigh what you want against what you need and then consider if the choice is in line with your values. When you enjoy the neighbourhood where you live these two choices always come to mind. First, out with the old and in with the new, fits with both a renovation and a rebuild, in fact, what is a rebuild? It is a complete renovation. This actually does away with what seem to be one of the choices.
From a cost point of view, renovating is the smart move. This is because you can still live in the house during this process. Where if you tear you bulldoze your house you will have to find a temporary living arrangement during the rebuilding stage, which, in reality, is nothing, more than an extreme form of renovation. Finding a temporary living arrangement can be expensive compared to a basic renovation. Think more on this question before you make hasty decisions.