I have numerous friends with several children and who live in a condo. Hell, the Mayor of New Westminster moved _out_ of his house and into a condo; he has three daughters. As usual, there's a Vancouver blog for this[0].

0: http://5kids1condo.com/

At that price it'll be a 2 bedroom condo.

3 bedroom condos in the core are rare, and generally start around $800k CAD

Have a large condo with 3-5 rooms. Maybe they would share a bedroom!