How is the sunken floor built now? How deep is it? How high are the window sills? How high are the electrical receptacles? Are there any doors to from outside or inside?

I tried to put a pict but failed. It is two stairs down. We do need the elec outlet to be moved up. Windows/doors are not problem at all since it is surrounded by three walls only. . It is vaulted high ceiling, so height is not a problem either.
Do you think joist with wood flooring will work?
Thank you!

Great idea! Thank you for the input!

What's under it? If there is a basement, I'd be concerned about the weight of concrete.

Please have an engineer look underneath, even if you decide to use joists. You are talking about adding to the load of the floor and house no matter what you use unless you rip it out and "remake" it level with the rest of the floors.

This type of sunken room does present a trip hazard! Notice the floor colors all blend? One way to delineate the drop is hardwood (or tile or any other flooring) all around but carpet in the "pit" area. That way your eye can see a distinction peripherally as you walk.

If it really needs to be addressed immediately, you could have a professional carpet and flooring person put on one top tread of a different material. I don't know how it would look so I would talk to professionals!

Good luck! It sounds like more than you expected when you bought the house?

Certainly look at the current structure. Sub-structure that is. Common joist and plywood with your choice of hardwood would be the way I would go. One thing though. The ceiling tapers down on that side. That may be why the floor is sunken. Measure the wall height at the far wall. Is that high enough from New floor to ceiling for you?

The arches are different heights: will that look odd, when the floor is raised?

No way I would make that change. As missingtheobvious noted, it's going to look weird. Any future buyer interested in the integrity of the original house is likely to look at it as a "remuddling" to be removed.

Did you make this change? I'd be interested to see what you did. If not, my suggestion would be to fill it with wood sub-floor and plywood top, and then add the flooring of your choice. You could drywall one of the arches and make the remaining two arches match. Then you would not notice the change in floor height.

"The arches are different heights: will that look odd, when the floor is raised?"

There are 3 arches in the picture (1 small 2 larger), maybe there are 4 arches with two large in the middle and two small on the outer edges. Hard to tell without seeing the rest of the room. I think it will look fine to raise the floor, and that is what I would do. Ensure the new floor joists are correctly added to the existing structure. I would not use concrete, too much weight.