Ours - kinda new to us - is 420 square feet, and it is, actually, a bit tight. I do have too much stuff though.
Downsized from around 1500sf. We'll be doing the compartment bed plan, but haven't built any yet. Just drawing up the plans, now that we've sorta figured out a place for everyone. Currently it's a couple of futons for dd & ds, & little ds sleeps in my bed (he has a futon, but it rarely gets opened out).
It's actually OK when it's just the family at home. But when the kids have any significant number of friends over, it's a much bigger impact on me than it was in the other house. Now, when there are extra kids here, I
really notice them. You can't not. It overflows quickly.
I may end up adding on another room just for that reason. I never wanted to be the mom who tells my kids' friends they have to go away.

(That's what my mom always did, for some reason.... no kids allowed inside except family.)
It's more than $1000 less than my previous mortgage, & at this time I'm making about half the money as usual ~ so lowering expenses works out fine in that regard!
We've only just moved in, though...... I'll let you know in a few months how it's working out.
Ours is not new.... I wish.

It's about 60 years old. It's got potential ~ & can be cozy

I can afford it.
My kids (19, 16, & 9) happen to be awesomely good sports, which really helps. I'm sure they miss having their own rooms etc., but they aren't complaining.... They're just acting like it's normal - & BTW it is definitely NOT the norm in our area. I don't even know anybody living in a house this small alone, much less with a family.
A cool development is that (despite some misgivings about how they'd react) my kids' friends are simply following their lead & acting like it's all normal too ~ like sure, "Doesn't everyone sleep in the same room with their mom, two siblings, a dog, stove, fridge, big bookshelves spanning the room, dining table & chairs, mom's sewing area & much too much fabric..."

Yep, just your average family home...