Basically, we just bought an $18 particle board bookshelf at Target. Casey used a belt sander to sand it down and I grabbed some paint we already had in the house and painted the outsides and top a yellow color and the inside side walls turquoise, which consequently is the same color I used for their beds.
For the flooring, I found 12x12 scrapbook papers at Hobby Lobby. The woodgrain could not have been more perfect and I love the black and white tile look for the kitchen! I used glossy finish Mod Podge to stick them on and seal them. You can look up online all kinds of tips for applying mod podge to paper and avoiding air bubbles, but I tried a few ways and still got some bubbles. I thought it looked awful until I put the top coats on and really, they pretty much disappeared.
For the windows, I simply measured and drew the frames onto white card stock. I then glued those onto the cloud background paper. On the lower windows, I also cut out the wave paper, to make it look like a beach house. I Mod Podged the windows on too.
I started out using papers for the back wall too, but the backing that comes with the bookshelf was flimsy, had creases and needed sanded. The paper wasn't sticking. So Casey went to home depot and got a thin board cut to the right size. It cost $5. I then picked out fabric for the back wallpaper. It worked sooooo much better! It went on with no air bubbles and it was plenty big enough so I didn't have to piece it together like I would have with paper.
The "carpet" upstairs was some printed felt, also from Hobby Lobby. It's much stiffer than felt, though, it's kinda the weight of Peltex. I made the zebra rugs out of a leathery like 8 1/2 by 11 sheet at Hobby Lobby.
One more note to add: rather than using the little shelf holder pegs that came with the bookshelf, Casey bought the L-shaped kind so they could screw in and the shelves won't flop around and the kids can't move them.
That's it! It can be as easy or as time-consuming as you want it to be! With the furniture I scored on Black Friday, our total was less than $60. The nice wooden Barbie houses and even most of the plastic ones are much more than that!