There are plenty of people in this world who live in tiny houses who are perfectly happy...and you've no right to enforce your view of morality upon them....or put them into debt to live to your standard.
The majority of the world also does not have a flush toilet. Just because some people are forced to live like that doesn't mean we should strive for it. There's a big difference between living that way because you are poor, and living that way because you choose to do so. Parents should respect their children's privacy and not force them to sleep in the living room if they can afford something better. I don't care if the adults choose to live that way, but they should not force it on a child.