Of course I/we could. People have lived in what could be called zero space, or depending on how one looks at it, total space (aka, the great outdoors) since time began. That's why we have so much good information on things like making weather shelters and migrating seasonally. Today, we call such people homeless. People can pretty much find a way to do whatever they want or need to do.
That said, society in general has learned to plan and build so people are quite comfortable and safe in homes they can afford, no matter the size. I think we as a society need to help each other rethink the concept of affordability. Banks want people to simply look at the bottom line to see how big a loan they can get, but that is not the measure of what is affordable. Considering affordability should include much, much more.
How much will that big loan/house cost the children in a family when both parents must work full-time in or outside the home in order to "afford" it? How much will that big loan/house cost if one of the parents loses their job for some unexpected reason? How much will that big loan/house cost in dollars, time, and physical/mental energy for the upkeep of a larger home? What a person/family can really afford should be evaluated from every angle, including prioritizing the people involved.
It's interesting to read of how there are 51 million Americans living in multigenerational homes. One family has made a business of showing how it's done. Look up Four Generations One Roof. Clearly, the selfishness that capitalists are constantly accused of has not reached all levels of society. That the question "Can you imagine living with four generations under one roof?" is ever asked is proof that selfishness has more to do with a me-first society, income bracket notwithstanding.