The bottom line is no one knows what the market will be like in 5-7 years, and you are the one who will be living in this home for those remaining years. You should do what you feel will make you happy and comfortable to continue living there.
Good luck with whatever you decide to do and Congrats on the new baby!!!
which will explain that in order for a room to qualify as a bedroom, it must have a closet, or cannot be 'appraised' as such. If you can somehow engineer a closet in there, then you would, indeed, add substantial value to your home.
Otherwise, I'd suggest you do whatever will fit YOUR life best- reselling within 5-7 years means a long time of living with the house. An added bedroom is a plus for many buyers, but a first floor laundry is a big deal to many others... either way you have a selling point, so go for what makes your life easiest!
Best of luck!
Congratulations on the upcoming arrival of another family member!
While a three bedroom home is will add value to your home, you already mentioned that you are planning on staying in the home for 5-7 more years. I would recommend that you leave your house the way it is. Not only will you avoid the added stress of a construction project in the near future, you might regret moving your laundry room to the basement with the added laundry you'll be doing.
You might concentrate on making the basement room more conducive to having guests....you could perhaps purchase a Day Bed or pull-out couch if you don't have one already. Having the half bath down there is KEY!
I always have my clients think about WHAT WORKS FOR THEM. Your guests are temporary so no permanent adjustments are necessary. At a minimum, I think you should wait until the new family member arrives to make any decisions.
When you are ready to sell, you can revisit your options. If the Real Estate Market dictates a sizable return on your investment if you convert the Laundry Room into a third bedroom, you could consider doing that!
Just remember: for the same reasons YOU bought the house, another buyer will too!
I agree with Tanya and the others. A third bedroom will add value to your home and make it more marketable when you are ready to sell. Many buyers will not even consider a home that does not have at least three bedrooms. Their search criteria most often starts with 3+ bedrooms. So I say "go for it". Just make sure that you add a closet in order for it to be considered a bedroom.
Enjoy your home.
If you're already talking about putting up walls in the basement for the laundry room, why not just put in a bedroom down there?