I believe it is a larger issue than what we define as the economy, which is mostly measured in corporate profits and Wall Street performance, this is not what the average person perceives.

My longest recent rehab was 2.25 months and added a half bathroom, took down 4 walks including load bearing, put up 3 walls, new plumbing, electrical, flooring, huge percentage of drywall, an eye brow porch, new kitchen with full layout change and new bathroom with full layout change.  

In my area if you are putting up interior walls permit is not required.

I will also add that many independent travelers that do room rentals enjoy having their own fridge.To keep things kosher in shared spaces, my friend who runs PadSplit says every room comes with one colors or plates cups etc to ensure that guests are accountable for their own dishes.

The build cost would be a little higher because i would use foam in the exterior walls and also use insulation in the interior walls for energy saving and sound dampining.

A huge number of properties we have looked at would have issues on this front.It can lead to an opportunity to improve the value of a property if you can buy it with an illegal area, get that area legalised and then sell on with a higher value that the bank would lend against, but it's not clear cut and it seems though that there are almost two levels of 'legalisation' - we were able to register all of the annex on the plans and could fully incorporate a portion of it but there is another portion that is too close to the back boundary wall that should only be used for things like storage and not ever for habitation. 2) During the purchase process be careful, amongst other issues with this property we had the situation where the seller's lawyer was not actually a lawyer (having been struck off).

I just sold one of the Class C - I saw the writing on the wall. 

The dog bit into the blinds, broke the TP holder off the wall, and scratched up the door and frame.

I would add that you can go a long way just having some clean color schemes (two wall colors and one trim color will do almost any house) and a few tasteful accent pieces. 

I am thinking of doing some remodelling inside, moving around a few walls, opening up the kitchen.