I Misled Them

So a few months ago (Thanksgiving ish), my husbands aunt was in town visiting. We were all talking and joking around and she mentioned she might look into moving back to town. I jokingly said 'yeah, you could live with us and watch our kid and save us the childcare expense'.

Apparently she took it seriously. The last few trips she has made to visit she has talked about moving back to town and living with us. I never meant for it to be serious but I just dont know how to say 'youre a good person but i dont want to live with you'.

My hang ups are that

1) she smokes. I hate smoking, how it smells, how it makes smokers smell, and i dont want it around my family.

2) she has a very hyper, not well trained pit bull. I am nervous around having the dog around babies. I dont know that she would bite babies, but shes not patient and she doesnt have boundaries.

3) my husband and i have 2 cats. Im not confident that her dog gets along with cats.

4) we cant afford an extra bedroom a few years down the line. We are purchasing (hopefully) a 3 bedroom home in the next couple months. One bedroom for me and hubby, one bedroom for a nursery, and one bedroom for guests. Naturally if she lived with us bedroom 3 would become hers, but if we have more children (we want like 4), we would run out of room so much more quickly.

5) im just not sure im comfortable living with another adult, especially a relative. I like to have nice things, and i like to decorate my home. I dont know that i want to share my space.

What i intended to be a joke has now turned into her retirement plan and i dont know how to tell her i wasnt serious without becoming the family pariah.