Addition vs. New Home

Hey all! I'm considering expanding my living space by either purchasing a new home (1800-2000sqft) or by making an addition (600sqft) to my 1200sqft home. In most situations, I've heard and read the advice that additions are almost never worth it. However, in doing the math, I don't think that's the case for me. My wife and I love our location, and would be hard pressed to find something comparable for a reasonable price.

Current loan is 3.25% 30yr with 25 years left. Monthly payment is $1480 including taxes and insurance.

An addition was estimated between $100,000-$150,000. I'd take a loan for about half of it.

Over the next 30 years, I expect to spend $580-620k in total housing costs including a possible 600sqft addition.

Now for buying a new house:

Current rates are around 6.4%. An ideal house would be around $500k in my area. I'd have about $160k down from the sale of my house, leaving me with a 30yr $340k mortgage.

If I pursue the new house, I'm left with about $1.06 million in housing costs over the next 30 years.

Am I missing something, or is pursuing the new house absurd? it's over $400k additional expenses over the next 30 years!