A photo of your situation would certainly be more helpful, but please reference @gardengal's comment, "The majority of the feel of an outdoor living room will come from how it is furnished and decorated." That in a nutshell says it all. The photo you provided is Spartan and underdone and not in a minimalist kind of way. It's simply not a complete design thought. The photo above in @gardengal's post is a complete design thought. So are the photos below. This one is a Ramada as an extension of the home with no fireplace. The one below is a detached pavilion with a fireplace. This one has an extended roofline over a small sitting area but most of the living space is in the open. Again, it's about completing the design thought. The photo you posted is simply an undernourished space. Find photos that you do like and work toward completing the space to create a mood and environment that personalizes it for you. When I have dialogue with potential clients that are unsure about what they want me to do I always ask them to write down the three most important things, which gives me a better framework to start with. I make sure, above all else, that I meet those three priorities. Ask yourself the same question and it will provide you a better starting point and a higher likelihood that you and the designer or contractor will be successful.

Hey, I wonder if you ended up installing glass patio covers? I'm in PNW as well near Seattle and building a new home with a 30x12 covered patio. I'm not worried about the sun. The patio would be on the north facing side, so there'll be very little of it anyway. I want to install a glass cover too, as I am concerned a traditional covered patio would block light into that part of the house.

Yes, use the basketball court for the floor and choose a cover suitable for your climate and your preferences. We prefer a full cover for our lounging area because every inch of shade is needed in the summer, we enjoy sitting outside when it does rain, and it helps prolong the life of our furniture which we leave out all year. The firepit I posted (Lowe's, about $430) has an adjustable flame which gets maybe 8" at most in the center so it's fine underneath if it's outside and the sides of the structure are open. It runs on propane - the tank is interchangeable with the one you use for your BBQ grill. It's taller than a coffee table, you can place drinks or plates on the rim and it can also be moved around and taken with you when you move. Sure, you can try to fit dining and the firepit on the concrete. If you decide to put lounging furniture there instead and move the table off to the side, it's better to have it on a concrete or stone pad than on the grass. Not only will mowing be easier, the grass may end up dying underneath it anyway. Yes, you'll want the stepping stones or pavers dug into the ground so they aren't a tripping hazard and laid on a base so they don't rock or sink. There are lots of videos about installing the kits and pavers. Price it all out before you begin, depending on your priorities, you may want to pay someone to install the gazebo/pergola. (BTW, you can also consider running power to it for a ceiling fan or lights!) Your yard looks so serene, I hope you end up with something you use a lot and enjoy!

If this is to be a retirement home for the two of you, focus on creating a one bedroom home downstairs and make sure you are able to close off any upstairs or attic guest rooms to control heat exchange -- save on heating and cooling cost and potential for clutter and cleaning issues. If your garage is going to be 26'or28' of the 42' width permitted on the front road side of the house, put the garage on the limited window side of the house. Have a living* room behind your porch and an entry (entry that can be closed off from the rest of the house with a glass wall and French Door or sliding door) alongside that garage with the entry from the garage into the house within same front entry (space saving) -- and put your stairs in that front entry as well, adding another French Door to be able to close off the stairwell from the rest of the entry to save on heat/ac when upstairs/attic is not in use. Put the kitchen behind the back wall of the garage -- more cabinet wall on windowless wall -- and use high windows above shorter / lower easier to reach overhead cabinets, except, if possible, over the kitchen sink -- put a traditional window there. Behind the living* room, you'll want a hallway beside the kitchen. Behind the kitchen, create a family* room kitchen with both dining and sitting area that extends all the way to the back wall of the house -- except, build a closet or small storage room at the back CORNER of that family room. Building only a closet on that corner could create the "room" needed to block the neighbor's view of your patio from that kitchen/ family room side of the house to create the privacy for at the back of the house, yet still leave the patio large/wider than if between two actual full width rooms, thus letting in more light to your family room sitting area. Also, If you make your bedroom elongated -- longer front to back rather than wider -- that, too, could make your patio larger/wider (as well as make your family room sitting area wider) and let more light into your family room sitting area -- where I suspect the two of you will be spending most of your time anyway. On the living* room side of the house, behind the living* room and across from the island between kitchen and family room, create a square hallway with a door to close the hallway off from the kitchen/family room areas. From that square hallway ... have a door that leads toward the back of the house into your master bedroom, have a door that leads toward the side of the house and into a large walk in closet, and have a door that leads toward the front of the house into a bathroom with a high window. The reason I put an " * " beside living* room each time is because, with well placed recessed lighting rather than a central overhead light fixture, you could actually use that front living* room as your large formal dining room area. If possible, use the high windows where you cannot have a standard window. https://www.pinterest.com/pin/167970261073723332/ OR see if you can be permitted to create a bump out for a modified bay window with the larger center portion of the bay be solid -- for art -- and have narrow windows that open and close in the sides of the modified bay window ... each facing front and back rather toward your neighbors on either side of your home. https://www.pinterest.com/pin/496310821404734990/ https://www.google.com/search?q=square+bump+out+bay+window&client=firefox-b-1-d&tbm=isch&source=iu&ictx=1&fir=KZbqRoZ5mvXeXM%252CRZ1bU2OJzUOxBM%252C_&vet=1&usg=AI4_-kQ9rJciHuSvHa90gXhXpSgPLElcfQ&sa=X&ved=2ahUKEwjK28f4x_TwAhW_EVkFHWABA5wQ9QF6BAgKEAE#imgrc=KZbqRoZ5mvXeXM&imgdii=HZ5HelmzkhSQQM https://www.google.com/search?q=square+bump+out+bay+window&client=firefox-b-1-d&tbm=isch&source=iu&ictx=1&fir=KZbqRoZ5mvXeXM%252CRZ1bU2OJzUOxBM%252C_&vet=1&usg=AI4_-kQ9rJciHuSvHa90gXhXpSgPLElcfQ&sa=X&ved=2ahUKEwjK28f4x_TwAhW_EVkFHWABA5wQ9QF6BAgKEAE#imgrc=KZbqRoZ5mvXeXM