I'm sorry to hear that you're going through this.

It's a very unfortunate situation.

If you were look at it differently, consider this for a moment. Had you two continued to live so close to her folks, she'd be miserable, she'd make your life miserable, and it would make your marriage miserable.

Happy wife, happy life.

Yes, your place is going to be smaller, and although it's a sacrifice, it could long term cause your marriage more stability than had you stayed.