I guess it depends on what your kids are into. I don't have kids, but my hunch would be that it would be best to keep the permanent infrastructure of the room pretty simple so you can change it up over the years to suit their interests. You should probably make sure it's wired so they can have whatever technology they want our there in later years when all they do is play video games. (If they're like my husband, that means well into their 30s : ) I do have one cool idea, though, which sounds a little out there but bear with me: A stage/theater area where they could do performance-type stuff. You could have a raised "stage" area at one end of the room and/or one wall partially mirrored, maybe some cool lights, and there could be a big trunk or a clothes rack where they could have costumes and dress-up stuff. Later when they are older, they could do karaoke or those dance video games and stuff like that with their friends, or if they study dance or music or drama in later years they could practice there. I also think a playhouse area sounds neat. When I was in kindergarten, our classroom had different play areas that we rotated to every day. There was a playhouse area that all the girls fought over because it was so much fun. It had a kitchen area and pretend food, baby dolls, play clothes and an iron, etc. There was also a "construction" area that the boys loved. It had big blocks you could use to build walls and toy equipment, etc. I guess it would be crazy to have a sandbox in there since it's indoors?

I'd go for House #1. Thinking, get out that bad rental, and who knows really when #2 will be ready. Developers make all kinds of promises that don't come through, and you sure are right about the pricing. (will leave out long, nearly identical story that happened to friends, pricing left them in a pickle) Also, I know you're thinking playroom now, but not knowing how old your kids are and how long you plan to stay in this house, I agree with pixie_lou and lyfia's assessments. In the long run, I'd take storage/work area over an extra room to clean up any day. Nobody spends time in the side yards - choose the best backyard and then front yard/neighbors. And that's house #1. You will be happy when you see your electric bill that you are not facing west! Another pro for house #1. Just my thoughts. Hope this helps!

Why not switch the couch and the children's storage unit. That way, people sitting on the couch can enjoy the view. If you have arm chairs in your dining room, try using one pulled into the room slanted across the lower left hand corner of the rug. That allows for a conversation between the person in the chair and those sitting on the couch. As to artwork, take a look at Pinterest for ways to create a gallery wall of children's art or you could use family photographs.

Congratulations. It looks like a wonderful home to raise your family. The most important thing is that they are playing happily and safely where you can easily interact with them and supervise them. This is their home and they are doing the important and wonderful work of play. So for these ages the basement does not work. A 2 year old (and even the 4 year old) need to be on the same floor level as the supervising adult, and your main floor room is ideal for that purpose. I would not close off the room too much. Maybe a curtain across the opening is all that you need. You need to hear what's going on. Or sometimes an unnatural silence is a clue that you need to pop your head in to investigate! Paint one wall with blackboard paint - it comes in many colours! There are lots of ideas on the internet for organizing smaller items (Duplo, books, puppets, stuffed animals/dolls, pretend hats/clothes). My granddaughters (ages 2 and 6) are often here and I have their things in heavy canvas bags with handles, the kind that you'd put beach stuff in. Some bags go in open cubbies and some into an armoire. It's easy to dump the bag somewhere to play, and then remind the children that one bags gets filled up and put away before a different bag gets dumped. https://mnmomma.com/ikea-toy-storage-hacks/ I love this idea! https://www.amazon.ca/Large-Children-Football-Organizer-Storage/dp/B01JLVC7NG/ref=dp_prsubs_1?pd_rd_i=B01JLVC7NG&psc=1 Or this one https://www.walmart.ca/en/ip/Toy-Storage-Organizer-Play-Mat-Outdoor-Basket-Large-Drawstring-Portable-Container-Bins-Floor-Activity-Kids-Room-Classroom-Gray/33XMDXW9HR61 I've seen deep old TV armoires repurposed very attractively as children's play places with lots of storage. https://thethriftycouple.com/5-ideas-to-repurpose-furniture-into-creative-play-for-kids/  Things like riding cars etc are more in-your-face but no less important for a child's development. This solution would work indoors too - a table with a curtain as the garage door. https://ourhousenowahome.com/2016/07/hide-kids-outdoor-toys-diy-storage-solution.html Enjoy that toys are part of your life now and don't stress that your house doesn't look like a sterile furniture store advertisement. If I walked into your house and the first thing I saw was your children's play area I'd think "Wow, what a wonderful family to grow up in!"