This is a great question......
In our location, we are finding the recent trends show that people are placing less importance on a formal livng room and are seeking to make their home's space more useful to their family's needs. People are finally coming to grips with the fact that a formal living area ends up being a museum for furnishings that are seldom used.
With this said, your proposed plans are in step with a changing trend that so many home owners are moving toward. Additionally, today's builders are also moving away from building homes with a formal living area. It just isn't a good use of square footage and results in money poorly spent.
It is my opinion that it's very unlikely that you will decrease your home's value and probably should increase its market value and buyer appeal.
Your adjustment is one that is keeping pace with the current trend....don't second guess yourself.
Good luck with your project. I'm sure the change is one that will be a welcomed improvement.
the exception would be that you are planning on staying there a long, long time:
You cannot remodel your house for the next buyer; you cannot make everybody happy, so don't try.
If you are doing it for your pleasure and comfort, that is one thing....
I am a Kitchen guy; I did Kitchen Remodeling and Cabinets for a living, and I believe it is the most important room in the house. But only if it is done right:
Re-facing the cabinets and putting on a new countertop is like running your fingernails down a blackboard to me.
There are a lot of cabinet companies out there, even lower cost cabinets that are not too bad. Please look in to that; for me.
Good luck and may God bless
Chances are you would not as formal living rooms are not as popular as they once were and in fact most builders offer few floor plans including living rooms and instead focus on open floor plans with a kitchen that opens to the family room / great room. As Tim has suggested it's difficult to accurately address this question without seeing your home and your plan for converting the space and the general flow of your home but generally speaking this change should not negatively impact a home's value and rather it's likely to increase the home's value due to the increased functionality of the space. As you've probably heard kitchens and baths offer the best return on your investment dollar on a home and if the size of the kitchen is increased this should also enhance the rooms appeal and thus market value! Good luck!
Better Homes and Gardens Realty