Most garages in older homes aren't built with the idea of expansion in mind. That means a great deal of work, and probably even a teardown to get the foundation and walls to support living space above. If purchasing this home was contingent on making this happen, then all of the leg work should have been performed before the sale finalized, and with the sale contingent upon the information garnered from the local experts, like local architects and engineers. You may be buying only the house that exists without any real potential for expansion.

Millions of homes have bedrooms or other living spaces above garages, even in Canada. Regional differences exist, so doing the living space above a garage in an area where that is seldom done could be somewhat of a gamble.

I lived in one for 8 years(in Kansas) and never had any cold/noise problems. And I worked on cars in ours. Insulation is the key.

You need to be sure the existing foundation can support the extra weight.

Of as much importance is doing the second floor laundry installation correctly. You need to provide a drain system---drain and catch basin---in case there is a leak/hose rupture/etc.

And halving a two car garage is off putting to me, unless the garage is the normal(for houses of that age here) too narrow for modern pickup trucks/big cars.

It is not difficult to create a living space above a garage but it is wise to insulate above the garage ceiling with closed-cell spray foam not only for energy conservation but to create a barrier against CO passing into the living space.
CO doesn't really rise or fall but instead readily mixes with air and can easily pass through cracks into adjacent spaces if the concentration is heavy enough.

The things you should be concerned with are how the space works with the overall layout of the house and its cost effectiveness.

Some homeowners object to the sound of a garage door below their bedroom but controlling when that occurs is not too difficult for most families.

just thought that was worth repeating renovator8

The expansion above garage is good decision as it greatly increase your space, allowing for a guest apartment, extra bedroom. But the cost of adding a room above your garage will vary depending on the size of the space, type of materials and the cost of labor since it involves excellent insulation and/or HVAC system to combat the heat and cold from the garage below. You should find a good contractor that offers solid warranties on workmanship.

Thanks so much for the wonderful input! This was incredibly helpful. Luckily, we have several other options for expanding the house, and it sounds as if the garage expansion would be more complicated than most options. My gut instinct is to go with our other expansion options and to reserve possible garage expansion for the future if we want a bonus room or something like that (with no plumbing involved, etc.)

Many thanks again!

Sara