Incidentally our living space is around 880 sqft in both places for a family of four (preschoolers.) We're anticipating that we'll need a slightly bigger place in five years or so when the kids need their own rooms.
Kids don't need their own rooms. I was raised in a family of 8 in a 1150sq house, 4 sisters in one bedroom, me and my brother in the other, parents in the master. Worked out fine, but I'm super minimalist. Even with that size, I could fit 4 people or even 6 in one normal house sized bedroom, 2 or 3 bunk beds will fit pretty well in a bedroom, though 2 would be optimal, with a couple dressers, or even one, depending on how minimalist people are.
Remember, the biggest reason people get a bigger place is to store more stuff. My survival instructor spent 5 months living with his wife and two 6 and 10 year old girls in a 300sq yurt, cooking and everything in there.