So the $250k+ house option is not only a better layout. It's fancier, more "updated" finishes and features, so you aren't comparing apples to apples. Do you really want those updates? To the tune of $200k?
I'd have someone come out to see if a pocket door is an option, and then put in a good fan, and one not designed to run especially quietly. . That solves the problem and likely costs in the low 4 figures, or less.
Also, you kind of glossed over the unfinished basement. You can likely put in a bedroom and primary bath down there for waaaay less than the $250k you are looking to spend on a bigger house, and you would be increasing your home value as well, especially if it is actually coded as a bathroom (which usually involves proper egress, among other things).
Since clearly you can live with the house as-is for a little while longer, doing so while someone finished the basement with your owner's suite would be no real issue. That, plus a pocket door for that bathroom, and everything except the street problem is solved, and for far less than moving to a house that costs $250k more.