My wife and I had two children in a two-bedroom apartment and room was certainly not an issue when we had one toddler. In fact, although we bought a house (3-bedroom) when my youngest (at the time) was under 6 months, we considered renting a 3-bedroom apartment instead.

Ironically, at the time buying a duplex was cheaper than a single-family home or renting. Renting, at the time was the most expensive option.

Lots of people raise kids in condos or apartments.