Wow, SL, what an intuitive post - our situations sound scarily similar! In answer to some of your questions, yes, my dh still likes living here which does colour his views somewhat. He likes the size and space whereas I now view the house as a too-large cash-cow! He can see the sense in downsizing to our 'final' home but struggles to accept that we won't be able to recoup all our money (we bought in 2008 literally just before house prices started to tumble :( ) and paid a premium because the house - decoratively - was pristine. Now, although we have done some work on the house - drive way / insulation / cloakroom etc, several other things need doing (which we've allowed for in the pricing).
We've seen a couple of potenial bungalows - offer accepted on one when we had a buyer on here but this is likely to be lost now.
Finally, I quite agree that my dh, too, may be feeling that he hasn't 'provided' well-enough for us to remain here. My dds and I CERTAINLY don't feel this way - it's been a great home but now is the time to move on and improve our quality of life with reduced monthly outgoings.
Again, SL,thanks so much for understanding all my ramblings. My R.L. life friends don't really 'get' what we're doing - they're in a more stable financial positions than us or else have remained in smaller home where they're not as stretched as us.