I suppose we are polar opposites. My wife and I have been in the same 1,300 sq ft one bath house for 38 years. We raise five kids here and it was a bit cramped, but I converted half of the detached garage into a bedroom and a bath and the older boys moved out there during their high school years.

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We too suffered from lack of room to entertain and host holiday events. However we have a 200 foot deep city lot so in between the detached garage and the house I built a game room. We can seat up to 40 out there for extended family events, but mostly we number 20-23 and we can get by with one 16' table that doubles as a table top shuffle-board. Next to that we have room to set up our ping-pong table.

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But the beauty is we only have to heat it and cool it when we use it. But it solved our limited space problem for entertaining our family.

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It's hard to tell by your photo, but it looks like you have a big back yard and a talented husband so maybe it would work for you too.