Step down the living room, in effect raising its ceiling and giving it extra presence and volume.
Use area rugs, lighting, and ceiling fans to "zone" separate gathering spots within open living spaces. Joanne points out that when there are fewer walls, rugs also add coziness. She and Dana used a whimsical floor lamp to give one spot its own personality and added adjustable-arm lights to turn seating into private reading nooks.
Choose a simple palette and let it flow through the living spaces. Dana and Joanne experimented to find the right ocean blue and sandy beige. They painted all the trim white to unify different areas and help them add up to one large space.
Shown: Columns help establish the living room boundary.