Hardly exclusive to Manhattan. Here in Vancouver, where every square foot is over 450 dollars/ft on average in the city, there are tons of one bedroom condos catering to mostly single or small families. The average single family home here costs 750000 dollars even in the so called "poor" neighborhood. Given that salaries are at the level of Nashville or Reno, and our mortgage terms are much more stringest than in the US, most families can only afford 1 bedrooms.
Other than the economics I think it is silly to expect that kids below 5 will stay put in their beds even when they have separate bedrooms. They will creep in when possible.
