Well, a few things first:
1) What are your specific long term goals - how much cash flow, what type of properties, how much net worth, plan on leaving job, etc?
2) And what is the timeframe for those goals?
3) What is your current financial position, not including the house? Steady job/work, that you both enjoy, would you be able to buy more rentals soon on your incomes, etc?
4) Have you run the #'s on any potential properties you would buy, if you sold? What are the returns as compared to your CA house, etc
I don't think there is a right or wrong answer, only an answer that aligns with your goals and plans, but some other things to consider, in addition to the things others have already posted.
* Low Property Taxes - You are locked into a below market property tax base. Your current property taxes are based on about half of the current market value, since your tax base value is set when you bought the property. And you can actually accurately forecast your future property taxes, since the assessed value can only go up a maximum of 2%/yr. Basically, you are "locked" into below market property taxes as long as you own the house (assuming prop 13 remains intact). I have rentals in other states worth about 1/2 of your house with higher taxes !
So, if/as rents go up, your prop taxes will increase much less proportionately and your cash flow would increase quicker. And if you did chose to move back to the CA house, you would still enjoy the relatively low taxes. Example: If you sold and decided to come back and were able to buy a CA house for 1mil, your taxes would be based on a 1mil assessed value, or around $1k/mth, probably about double what your house taxes would be if you kept it.
* You have the opportunity to add an adu and immediately increase your cash flow. You could probably do that with a HELOC and my guess is you could double your cash flow. So, basically you have the opportunity right now to finance a new rental without purchasing another property! You have plenty of equity to do it. Essentially, if you built the adu with a HELOC, technically, your return would be infinite, since you should be able to finance 100% of it! For example sake, let's say it costs you $200k to build an 800sf adu (2bed/2bath), my guesstimate is rent could be around $2,750/mth. You may be able to find a better rate, but I have a HELOC at 9% at the moment, so that equates to $1,500/mth [($200k x 9%)/12], interest only. There will be some nominal increase in your prop taxes and possibly your insurance, but that is an additional gross cash flow potential of $1,250/mth ($2,750-$1,500).
So your total potential gross cash flow is around $2,250/mth+ ($1,250 for adu + $1k for sfr). Of course that doesn't take into account reserves, etc.
So, that equates to roughly a 6.75% [($2,250x12)/$200k] gross return on the potential $400k cash you might walk away with from the sale of the house. Sure you could probably find investments, where you move, to produce that return, but you wouldn't have the "locked-in" prop tax base value, the potential CA appreciation, a house in an area/neighborhood you know, etc.
A lot to think about, but no bad or wrong answers! Congratulations!
