Number One. IME roads only ever get busier and the noise will be annoying. Also, pollution is higher on busier roads. This would disqualify number two for me. Also, dormers can be awkward and it's easy to bang your head on the corners. They can be cold in winter and broiling in summer and the noisy rain on the roof can be an issue. It looks like a pimped up small bungalow and for the reasons listed may be harder than a solid house like number one to sell on.
Amazed at what you get for your money in Durham!