Half of the world live in small spaces and it's not a drama. I would love to downgrade our home. I grew up in Europe so everyone pretty much lives in units unless you live on a farm. The whole big house thing is a pretty new invention in the west. Living small is a huge trend right now because people are getting fed up with mortgages and consumerism. I see no issue with a 2 bedroom place. One room for your child and one for you and hubby. A kitchen, bathroom and living room. There is no reason to have more. I live in a 4 bedroom 2 bath house and I hate it. I grew up in small spaces and it was great, but DH refuses to sell (huge issue for us right now).