Contemporary public debates on housing focus largely on affordability, often overlooking inequalities in housing quality, such as housing space. Using longitudinal survey data from Germany (1985–2022), a country with a tenant majority, this study examines household overcrowding and under-occupation. We show that the risk of overcrowding (currently 11%) is highly unequal and driven primarily by socio-demographic characteristics—such as parenthood, migration background, marital status, and education—rather than income. Families with children, low-skilled individuals, and migrants are particularly vulnerable, whereas high-skilled, childless, native-born individuals face a comparatively low risk. In contrast, under-occupation, affecting up to 39% of households, is shaped by similar socio-demographic factors as well as homeownership. Longitudinal analyses further indicate that life-course events, including childbirth and changes in marital status, are key drivers of transitions into both overcrowded and under-occupied housing. We also document a substantial gap between objective and subjective measures of housing space, pointing to widespread misperceptions. These findings carry important policy implications: reducing overcrowding requires targeted support for high-risk groups, while improving housing efficiency may involve incentives for downsizing, intergenerational housing models, or under-occupancy taxes, complemented by awareness campaigns.