Should I push my budget for the "right" home?

I'm interested in people's opinions about my situation. I am 51, single and with no dependents. I just sold my house (detached, semi-rural, on the edge of a small city in Ontario) and I am now househunting in the suburbs of a mid-sized city which is more expensive.

There is a house that I am very interested in that is currently listed for $600K, which is overpriced for the current market (another house of the same model and in the next street went for $550K a few weeks ago and the only clear differences are that the one on the market has no rear neighbours and the deck is in better condition). Furnace and AC are also possibly near end of life. Sellers don't want to drop the price much further so I don't know if we'll reach an agreement but the house has been on the market for a few months now.

I have a lot of flexibility, in that I have been invited to stay with friends for whatever length of time is necessary between selling and buying, and I work online so it doesn't matter where I stay, but I also have a certain amount of precarity because my income is stable but not guaranteed and I don't think I'd qualify for any benefits if I lost my work. My emergency fund is my TFSA and that would keep me going for about a year at current spending levels. I also put the maximum amount into my RRSP every year after not really planning for retirement for the majority of my adult life.

Should I risk pulling money from my TFSA and/or reduce what I put into my retirement savings for a year or two to get a house that I really could see myself being very happy in, or should I compromise on the house (location, age, go for a townhouse or semi-detached or consider a less expensive area) and/or wait it out to see if another great house at a better price gets listed later in the year?

Thanks in advance for any opinions you can share.