Remodel, move or stay put and adjust- advice needed!

We have a big housing dilemma on our hands. Actually, it's more of a little house dilemma. Let me start by saying that, when we purchased our current home last spring, my husband specifically asked me "Will this house be big enough when we have more kids?" I replied with "I'm sure we can make it work. After all, love grows best in little houses!"

Perhaps I was overly optimistic and perhaps I was just a little too eager to move out of our temporary rental (we had sold our previous home MUCH more quickly than expected and had to close and move out before we had bought another home) and to get our furniture and belongings out of temporary storage. After all, three months of indoor camping with only a few suitcases full of clothing and only the basic necessities for my husband, infant daughter, our three dogs, cat and me was growing tiresome.

We did and still do love our house. It is tiny (just over 1000 square feet plus a full, finished basement, so close to 2000 square feet total but split onto two levels) but it is a short drive to my husband's office, within walking distance to the river pathways, it is very cozy and completely updated and renovated with Italian tile floors, granite and crown moldings, is located in a great neighborhood with many young children and one of the best elementary schools in the city just a few blocks away, and it is a very short drive to downtown and most everything in central Calgary. With two bedrooms upstairs plus a small office (that used to be a third bedroom but that was converted into an office with glass French doors and a built in bookshelf/desk where the closet used to be) and another full bedroom, bathroom and play area/living room downstairs, it seemed like a good fit for our family of three. Even if we did have more children we could still use the downstairs bedroom, I reasoned.

Fast forward 9 months and we are now expecting our second baby. Our daughter is 15 months old and currently occupies the second bedroom upstairs. Here is where the dilemma lies- in preparation for the new baby, do we remodel and convert the small (very, very small) office back to a bedroom, which would entail removing the glass doors to make a proper door and tearing out the built-in shelves and desk to create a closet again so we would have three bedrooms upstairs all on the main level, do we move and leave our cozy, wonderful little home in hopes of finding a new, more spacious abode that would allow for a proper room for each child, or do we just make due with the space and layout that we have and possibly move our room down to the basement and let the children stay upstairs on the main floor or move our 15 month old (who will be 21 months old when the baby arrives) to the basement and keep the newborn upstairs in the second bedroom across from ours?

The first option of renovating is not particularly appealing to me. The tiny third room is a great space for an office and it would be a tight fit to even make a crib, change table and small dresser fit in that area, not to mention the cost and trouble associated with overhauling the room. The second option of selling our house and moving sometimes seems like the most practical decision, especially since we would eventually like to have a few more children and, despite our best intentions, 4 or 5 kids in 1000 square feet of above-ground living space might be a squeeze. The option of just switching rooms and moving someone down to the basement doesn't appeal to me either since I don't feel comfortable leaving our 15 month old daughter downstairs by herself, especially since she is active and adventurous and I can already imagine her cruising around the downstairs by herself at night as we peacefully sleep upstairs, unaware of her wanderings and, even if we thoroughly child-proofed the basement with multiple baby gates and closed her door at night, if a fire were to break out it could be tough to get her out in time. Being a mom who likes to sleep with all of our doors open and who often checks on our daughter multiple times during the night, the option of moving our room downstairs to the basement and keeping the kids' rooms upstairs on the main floor is also less than appealing.

Any thoughts, advice or suggestions are greatly appreciated! Love may grow best in little houses but sometimes fitting everyone into the little house can be a bit like playing a game of chess where there aren't enough squares for all of the pieces. So, if you have a brilliant solution I'd love to hear from you. Otherwise, our great little home could soon be back on the market we move on to bigger digs. Thanks so much!