City living or more space in the suburbs?

Asking here because I’m looking for the perspective of like-minded parents.

I’m a newly single mum to two opposite gender kids under 5. I currently live in a small (1000 sq ft/100m2) house in the suburbs, about 20 mins by car but an hour by transport from the city. I am feeling really suffocated by having to drive everywhere, by the same-ness of all my neighbours (who are by and large much more conventional than me) and by lack of community/like-minded people. Everything I want to “do” (days out, activities, etc) I have to go in to the city for. My eldest is not yet in school, but schools in the city look a lot better suited to us too.

I lived in a big city before kids and loved it. I walked everywhere, went to loads of events, museums, etc. loved exploring neighbourhoods and loved the diversity of people/shops/cuisines around. However, that was before kids - my outlook in general has definitely changed since then!

I‘m looking at the possibility of moving, but realistically it would either be a small two bed apartment (~800 sq ft/80 m2) or a two bed house on the outskirts of town that would still necessitate a car but might leave the possibility of adding on another bedroom sometime in the future. My current house has one large bedroom for all of us, but this could be divided into 2-3 bedrooms, plus the possibility of adding an extension later. Moving to the outskirts doesn’t seem like much of a change.

I want to be in the city - I think it would be so beneficial for my mental health and would be great for my kids in terms of schools and fitting in. But I’m worried that such a small space would be too small for us very soon and the kids will eventually need separate bedrooms. Plus there’s the issue of lugging bikes and things up and down stairs vs the large backyard we have now. I also don’t want to move now just to have to move again in a few years when we need something bigger.

Has anyone made this choice? How did it work for you? Or what would you prioritize if you had to make it now? Any perspectives are appreciated, as I just keep going round and round.

TL;DR: With two young, opposite gender kids, would you prioritize more space at the expense of boredom and car-culture, or an urban lifestyle with kids sharing a room and no space for hosting friends?