Hi, Kari. No need for desperation. You obviously have time and a rather nice kitchen to think about, and there are a bunch of things you can do. You seem to have some pretty typical issues here:
1. Remodeling for resale versus
2. Remodeling for you.
3. Not enough money for everything you want.

Honestly, to maximize return from your investment, all remodeling for resale should be done soon before it went on the market. That way you could ride the new trends, and there would be no aging of the surfaces. That would mean no granite now. After all, people could be sneering at the plastic it's coated with by then and then where would you be? Or touring with an eager eye for induction, hating those old-fashioned deep refrigerators and longing for a nice wide shallow one. Or? Or? One thing you can be sure of, the kitchen industry will be selling something else by then. Plus, for the market you're describing, $10K won't get you very far. Granite on cabinets that are still "out of style?"

For yourself, though? Your layout problem is obvious, and I certainly understand your wish to allocate more space for dining. (On this TKO forum, way too many people are busy trying to create your problem.) However, it's really not a bad kitchen at all, attractive, certainly lots of counter space. It's certainly a better one than many, many out there. A little of the basic maintenance all cabinets need now and then and your cabinet problem is fixed. Remove the overhanging bar counter and stools and you have more space for dining. Splurge on granite to appease yourself while you wait for your next home? That is a standard cabinet style--could you by any chance take advantage of that to move your stove to the right wall, closer to what I presume is your main work area at the bar? Conceivably remove some of the uppers and put in a nice new hood to create a great place to look and work at? Is your stove vented now?

OTOH, if you really intend a complete remodel now (and I'm guessing maybe that's what the "desperation" is about? How to manage it?): Maybe Ikea or other low-market cabinets with some good inserts and features, like some nice drawers or pullouts. Save money AND go with current trends by leaving off some of the upper cabinets. Put the rest of your budget put into other stuff that shows, like the counter, backsplash and floors. Skimp on stuff that will not effect buyers' decisions in the least like a heavy-gauge sink or fancy faucet. If budget ran short, some of the stuff, like inserts, backsplash, and whatever could be finished in a staged approach. If that's what you really want, take measurements and post a floor plan, and you'll get all the layout ideas you would wish.

IKEA is a great option and I'm guessing you can do the cabs for about 3K. Your sons and you could assemble them. I wouldn't bother to change your layout. Most people who come through homes look at the cabs and granite. Few think about function. I'd reduce the counter to single height and do with entry level granite.

Now...how many inches do you have from the floor to the bay window? Is it high enough to build banquette seating and then you would have room for a rectangle table? You could also forgo the overhang on the dining side. That would give you extra inches.

It's a very nice kitchen. Your kitchen/FR are very much like those of one of my good friends.

Before I went the direction of new cabs I'd clean those down and see what they look like then. Usually over a number of yrs our cabs take on layer upon layer of dirt w/o us even knowing it - and it darkens them. I know there's a good product out there to use for this - I just don't know what it is, tho I've read it on here a number of times.

Then I'd probably check with Scherr's to see if they could make me matching drawer fronts - 'cause I'd want to have more drawers in there. I'd also change a cab by the stove/prep area to be pull out trash. One by the sink also (maybe depending on where the other one goes).

If inner shelves are breaking down, they can be replaced. You can check the pricing w/Scherr's or Lowe's has white shelving that is laminated and they'll cut it for you.

as for the peninsula / counter area - I'd fix that by using new counter top that is wider on the FR side and front allowing more space for seating there (it looks like there isn't much room under it for legs). I think I'd have the new counter top curved on the corners. And I'd narrower it on the table side so that the table could be pulled out a bit (maybe under the light?) and would be centered on the rug.

And I'd redo the outer side of the peninsula.

I'd check into the cost of putting a prep sink on the counter to the right of the stove (to the left of the door there -is that a pantry?). That'd give you great prep space w/o needing to use the cleanup sink. From the fridge to the counter by the stove - ready to clean veggies and fruit!

I also think the space over the fridge looks bare so maybe a new cab over it. Possibly a new one to the left of the fridge so they go together. You seem to have lots of storage space (but is there ever enough?) so if you don't need more up there, use if for a display area (I've got a pic of one and will post later).

Are you wanting a new sink / faucet? That might help update it - tho I see nothing wrong/bad w/what you have now.

What's in front of the peninsula/sink area? post a pic?

can you post a pic that shows the upper cabs to ceiling on the stove side of the kitchen?

Do you want to keep the OTR mw? or move it somewhere else? put in a new vent hood?

Thanks so much to both of you for the great responses. I hadn't thought of IKEA (we don't have one near here that I know of). I did think of the banquette seating option too. :)

It is actually a relief to hear that I should perhaps leave the layout as is. I thought too about not putting the overlap on the breakfast bar to save a few inches, but I hate to have that huge bar there and not even have it be functional as a place to sit and eat or whatever. I realize that in my kitchen it is a trade off though. The rest of the house is designed this way too. (I often wonder if the person who designed the house was sober)

I have also thought about removing the cathedral style doors on the top cabinets and replacing with ones like the bottom, then repainting the cabinets and perhaps adding some molding at the top to reach the ceiling, giving the illusion of more custom design. I am afraid that painting them might end up looking cheap, though. I love the cream color with tan/brown glaze, but not sure I can achieve that look professionally enough.

I guess the desperation comes from thinking about another year or two without being able to sit at a table with my kids and eat (the dining room is formal and I don't have a formal table in there).

My goal is to put it on the market next spring, so that isn't much time, but your point is well taken about doing it as late as possible. And $10k is definitely not much money in terms of a kitchen rehab.

Thank you desertsteph! My response crossed with yours. I'll take the requested photos and post them.

Great ideas. How would you recommend re-doing the front of the bar area?

I thought about moving the microwave from above the stove to where the microwave shelf is now, next to the fridge (although not in that particular microwave shelf, as I don't like it and it's too narrow for the microwave anyway). It would give me space for a backsplash design over the stove which could add to the custom feel for not a lot of $.

I like your idea of painting, Kari; it's what I'd almost certainly do myself. Filling in the space above the cabinets could be done by any competent handyman for not very much. I personally would skip the glaze and just paint; glazing is too trend-dependent and apparently already well out of style, whereas painted surfaces never go out of style, only the latest "in" color. How about a nice beige for a calm distinctive look?

As for your dining area, it looks to be about 8' wide. That's enough for most families, if hardly generous. How about slice off only the overhang that faces it since you feel cramped, but keeping the diagonal part and stools that're not in the way?

If you have more than the 5 kids or so you could fit in there, use your dining room. It's NOT a formal room. It's just a room you can use any way you want. Take the door off. Same for the window seat--if you don't like a table there, lose the table and make it into a delightful sitting area with a loveseat and accent chairs.

You might like to check the decorating forum for the thread on decorating for the way we live. Budget and lot size are strong enough constraints on what we want without manufacturing imaginary ones to go with them.

"without being able to sit at a table with my kids and eat (the dining room is formal and I don't have a formal table in there). "

I agree with rosie - make the DR what YOU want it to be - informal if that's what you need!

If you put a rectangular table in front of those kitchen windows tho, I think you'd have enough room for the 4 of you. measure it out. 2 in the back and 1 on each end. if that end of the counter is slimmed down you'd probably have plenty of room between it and the table to walk thru easily (where the stools are now).

I hadn't thought a lot about the front of the counter - just that it seemed bland. maybe w/o the white trim and white counter top it wouldn't look that way?

I wondered about that cab to the left of the fridge. mw's are smaller today. Those OTR mws are larger. I just had reason to measure my mw and it's 10" H x 20" L and 15" D. I think it'd look better there and a nice hood over the stove would perk things up. Check those measurements w/your mw cab - it could probably be trimmed out nicely to hold a smaller one. They aren't usually that tall. They aren't very expensive now either. I think I paid about 50.00 for mine 5 or so yrs ago.

I don't care for banquettes - had something like that while raising my kids and wouldn't do it again. Someone is always stuck back there. The someone who ends up needing out of there the most often. It's a pain for others to move to let them out... and back in. and to move the table to give them room.

moving the stove is a pretty good idea - except it'd then be in the walk thru area. Where it is now other people can come in the kit and get a drink, go to the fridge w/o being in the cook's way.

your floor looks great! I'd spend the money on new counter top, moving the mw and a prep sink, and changing the table. Can you put that table into the DR for a game table for the kids?

As for granite - well, I'm not a fan of it (tho there are many I just looove the looks of). It's hard - things dropped on it will break and glass will fly around and splinters of it will go everywhere. That's a choice you'll have to decide on. If going granite, I'd check yards for something that doesn't look like it's the cheapest tho. Those that are a bunch of speckles always look cheap to me (people have different views on that). I don't like a lot of spots anyway tho - lol! Really dark ones seem to show the dust a lot too. The granite yard might have something stuck back that someone never followed thru on or isn't the 'in' thing right now. If they do good seams they might have a partial slab or 2 that would fit your kitchen. Take a layout of your kitchen with you.

I'd certainly fix the table situation as soon as possible so that you can all sit around the table to eat and chat.

here's a version of an over the fridge display area -

and I'd try to put in some slide outs in the cabs if possible - reusing the doors. possibly like this -

or this -

or this -

these can be worked around you needs for what you have in the cabinets.

Until a few weeks ago, we had a pony wall and raised bar like yours. We changed it to a one level peninsula and gained so much work space and openness. We had no need for bar seating because the DR table was just a few feet away. We built cabinets and display shelves on the DR side of the peninsula. Our peninsula is now 36 inches wide AND we gained about 5 inches on the DR side!

I would highly recommend going this route, but be aware that your plumbing and electric might be in the pony wall and they'll need to be rerouted to inside the peninsula cabinets.