How to fit into a smaller home?

Since you live alone, I would turn the second bedroom into you craft/sewing room. We moved from a four bedroom house to a two bedroom apartment.

Me too! Lack of storage can be exasperating.

Downsizing several times Ive learned to maximize all available storage options. For craft supplies I have multiple storage draw units and towers and a few totes in the garage full of ribbons fabric and some art and craft supplies and of course holiday decorations. In the kitchen maximize cupboard storage utilizing various storage bins baskets and elevating wire racks in all cabinets above and below countertops. You might consider using the backside of the cabinet door too. Purge the things you dont need or store other things that you don’t use often in another area of the house....like under the bed, garage or basement closet. Put you beds on risers and use low profile totes and spacebags under the beds. Switch out summer and winter wardrobes. Some people use storage Ottomans or trunks as coffetables to hide extra items as well. Lastly the beds with drawers below the mattress are options too.

http://www.ana-white.com/2009/11/plans-by-your-request-drawers-for-queen.html

https://www.hometalk.com/diy/s-11-storage-hacks-that-will-instantly-declutter-your-kitchen-33990625?se=fol_new-20171226-2&slg=b78c6571626002bac08964e21e0ce533-5943670&post_position=2

You could rent a storage unit to store everything, then slowly whittle away until it's clear.

Get a couple of tall $25 bookcases from Walmart for your crafts. Use clear jelly, mayo and whatever jars and clear plastic containers for your supplies. Fold fabric on bottom shelves. Secure the cases to the wall with L brackets or long screw into stud. This is tons of storage with small footprint.