no one can answer this w/o seeing the house/rooms, or knowing what real estate is like in your area. Are you really concerned w/resale or living in a house that you want to live in? Personally I design/decorate my house the way I want to live. I don't care about resale. (unless you're doing something really, really drastic, I'd say no)

how old are the kids? you want to decrease your master suite so that they can have a playroom?

does this suite have a nice master bath? resale-wise, a nice master bath would matter more.

I'd advise you to ask a local real estate agent their opinion.

But then ask yourself, "what would make me happy"?

do the latter.

Your house began with just one bedroom upstairs, you just enlarged it with unused space. So whatever choice you make, you’re not going backwards (not taking away anything). So the real comparison is how big are primary bedrooms in your area? Only you and the Google can answer that.

If you believe you may move in less than 5 years, you likely won’t recover your investment to change upstairs. A large master ensuite is highly desirable so I would hold off until your short term plans are clearer.

Where is the floor plan in feet and inches of the current condition - both living floors of the home?

Nobody can say: ) god/bad anything without that.

Sounds like a LOCAL realtor question to me. I know during COVID the home office became a must have for many. As employers are transitioning their people back to the office I am not so sure home offices are on wish lists like they once were. Four bedrooms in a starter home sounds like one too many most of the time. A realtor would know what potential buyers are wanting/ willing to pay for in a starter home. Perhaps not having the office will get you to the next home faster? Oh and using the reno money for the new home makes a whole lot more sense to me w/o seeing pictures to know what exactly we are talking about.