Financial / life advice. Should we sell our home to buy an apartment instead

Please read it all before voting. And please be nice it’s such a sensitive subject for me but I want to be open to self growth if I’m totally wrong.

I’m gonna try to make this short.

We live in a 3 bedroom, 2 bathroom, 2 car garage, .28 acre, “new” house. It was a brand new construction when we bought it 5 years ago. Very nice, up to date home. I love it.

We currently owe 210k

It is currently worth approximately 360k.

Husband commutes an hour to work currently but it’s not too big of a big deal (work truck, company pays for truck, gas insurance. Only main downside is the loss of the 2 hours a day by commuting)

With the rise in housing, he suggested selling our home, and buying an apartment in another city 30 min closer to work, for approximately 160-170k and hopefully being mortgage free or close to it. The goal then would be to eventually rent that one and move to another house.

My concerns: I’m due with a baby#2 in 2 weeks and we have a two year old and a golden retriever. The 900 square foot home he showed me literally almost made me want to cry. (But i dont want to decide off of an emotional standpoint) I lived in small apartments til I was 12. (He’s never done real apartment living). My dream was to have a backyard one day. And while I know this would put us ahead financially, I still feel we’re going backwards.

We are not struggling financially. I’m a stay at home mom, we have zero car payments, zero credit card debt (student loans yes plus other regular bills), and husband makes 100k a year. Our mortgage is $1,350 etc. his argument is we’d cut down being mortgage free to a few years instead of 15-30 and what other chance will we have to “make” 150k and speed up the process on having a rental property. Which sounds GREAT, but to me, (again i could be totally wrong. My parents are not financially literate which is why I’m asking here. I don’t want to be the one to hold us back) seems like a whole lot of sacrifice when we’re totally fine and can patiently save for that rental property. It feels like he’s willing to put me, the kids, and the dog in a “less than” ideal situation for money. All I can think about is how am I going to walk our dog with a toddler and a baby. How am I going to bring up groceries, with a toddler and a baby etc. our backyard is such a big part of our day.

Not to mention we have a flats boat (paid off) , not sure what his plan would be there, on where to put it. I also ran a small Etsy business (about 40k in sales so decent) out of our garage, that would be gone. We also save on the gym by having workout equipment on the other side of the garage.

Does this seem like the chance of a lifetime ? Sacrifice now to be better later? Or does it seem like a whole lot of inconvenience and he just needs to be patient for us to eventually have a rental property.

We are 30.