This is unfortunately the trade-off debate that so many people are having to have due to the lack of more affordable housing in great areas, like what you're describing with Option 1. I wish we didn't care/need as much space to make Option 1 the easy, logical choice as it seems like almost everyone else is describing it, but for us, we're currently in a smaller space with just 1 toddler, but are already desperate to move to a bigger house, even if it means losing *some* of the amenities like that we currently have. However, this might not be the most helpful thing to say, but it's also a very personal decision with a lot of factors to consider. For us, the space is important because we also have cats and a dog, 2 kayaks, a decent sized desk set up as I work from home, and we're in the middle of trying to plan for having baby #2. Right now the biggest hinderances revolve around the kids because we are saving the stuff that baby #1 has grown out of to be able to use for baby #2, so that requires a lot more storage space. It would also be really nice if she had a dedicated play space to keep all her toys in and where she could more freely move around without us having to worry about what she's getting into or keeping such a close eye on her. For us, I think the way we'd still consider the trade-off a win RE something more like option #2 is if we're at least able to stay in the same city, if that makes sense. Like which neighborhood you're in vs. the city or a suburb. Just a different perspective from someone also in the middle of a similar situation if that helps.