Well, we did do this on a regular basis, but we have basement storage. Lots of it. Do you have a garage where your husband could screw in some brackets, buy a wide board and put the little people stuff up on that higher shelf? We had a lot of the vintage little people stuff, I've sold most of it, and those buildings were always sitting on top of the storage shelves/cupboards, they are so bulky and odd-shaped.Open storage may be the answer for those pieces.
What has helped is to sometimes offer less-precious toys for others to borrow, understanding that they might return with pieces missing or in less than perfect condition.
Another idea would be to ask the grandparents to keep some of it at their house as special toys to play with there. I have a girlfriend who does this with annoying noise toys.... just tells her folks "hey, the boys love this, and I think it would be awesome as a special thing when they come to your place". Or be even more honest-- "we just don't have much room to store this, and can't keep all these toys out, but I know son would love to do some fun things with you. Maybe we could consider those outings as presents?" Or direct them to smaller-to-store but absolutely great presents like playdough, markers, paper, contact paper (it's spendy) for sticky paper collages, art supplies-- that sort of stuff is perfect and will get used up and go away!