The average American home was around 1500 feet 30-40 years ago and people raised families in them just fine. Instead of 4br 400sq ft each with en suite bathrooms, you had 120sq ft bedrooms for kids. It wasn't until the excesses of the mid 2000's that 3-4k sq ft homes became somewhat common, and outside the realm of mansions. Now the trend for home size is decreasing.