Living in a small space is great, OP. I live in Denver, was in a 600 sqft. 1 BR, recently upped to a 800 sqft. 2 BR as we're expecting our first kid. Wouldn't be cramped but for the 3 bikes, fishing gear, bike cart and backpacking gear I own.
On the positive side, I pay $1350/month and we are able to maintain a 58% savings rate despite the fact that my soon to be wife stays home and we're planning a wedding 5 states away next month. Luckily my income increases a bit this year so we should be able to sustain that rate with a kid (plus I won't be getting married again next year). Meanwhile, my coworkers live in the center of downtown and pay $2700+/month for the same space, plus $100/month for a parking space for each of their two cars. That doesn't even begin to touch the ones who buy houses here.