I live in a small apartment a short train ride from the office. It isn't big enough to work from home. If I worked from home I'd get a big house in the suburbs, and buy a car to get around. My environmental footprint would be much bigger. Edit - if I didn't have kids I'd totally have a beach house and a mountain house to live in. Maybe in different countries too.
Perhaps it doesn't apply to you, but it's natural for many (most?) to require larger or smaller places as needs of immediate family evolve. I don't know that larger places are necessarily optional or environmentally worse.
Dogs are optional, and I hear people cite them as a reason to move to a bigger place all the time. It also seems like "get a dog" is the first thing a lot of people do when they get into a WFH situation.