It's hard to say whether this behavior developed because of the reno exclusively or she's genetically anxious and she's just exhibiting symptoms now. It might be a little of both.
Because of the severity of the anxiety, I would consider the medication. If she's immediately going to her safe place even in her own home, she's likely over threshold and can't learn that the people walking above her are not going to hurt her. Once the edge is taken off her fear, she can be in a place to learn. There are different medications and dosages so they're not "doped up", just not constantly afraid of existing. Additionally, you can't really control the people above you. For now, it's probably better that she's on something to help, because I don't imagine you can be home any time the upstairs neighbors are home to work with her.
When you are home, though, and you hear people walking around, throw some delicious treats (if she's not taking them, that can be another indicator that she's way over threshold and not in the frame of mind to learn). The idea is that she learns noises from upstairs = treats.
Many dogs are weaned off medication depending on the severity of their anxiety, too, because once they are in the proper frame of mind to learn and have gained those coping skills, they don't require the medication anymore. I think you should discuss this with your vet more, or even consider a behaviorist or trainer specializing in anxiety since this is kind of a tricky situation where you are completely unable to control the trigger.
Because of the severity of the anxiety, I would consider the medication. If she's immediately going to her safe place even in her own home, she's likely over threshold and can't learn that the people walking above her are not going to hurt her. Once the edge is taken off her fear, she can be in a place to learn. There are different medications and dosages so they're not "doped up", just not constantly afraid of existing. Additionally, you can't really control the people above you. For now, it's probably better that she's on something to help, because I don't imagine you can be home any time the upstairs neighbors are home to work with her.
When you are home, though, and you hear people walking around, throw some delicious treats (if she's not taking them, that can be another indicator that she's way over threshold and not in the frame of mind to learn). The idea is that she learns noises from upstairs = treats.
Many dogs are weaned off medication depending on the severity of their anxiety, too, because once they are in the proper frame of mind to learn and have gained those coping skills, they don't require the medication anymore. I think you should discuss this with your vet more, or even consider a behaviorist or trainer specializing in anxiety since this is kind of a tricky situation where you are completely unable to control the trigger.