A landscape designer to help you develop a plan would be $$ well spent. My thought is first & most important thing is to figure out placement of hot tub. Things to consider about placement: View from inside house; Which windows do you NOT want to look out & see the tub? Time of day you’ll use the tub most often & where is sun in sky at that time? How far from house do you want tub? How far do you want to walk to get to it? Trees - you don’t seem to have any but at least one of your neighbors does. Will there be leaf drop from them that you’ll need space around tub to be able to clean up leaves? Will the trees provide shade from sun & / or privacy which will affect need for another pergola? If tub is close to existing pergola can it be an extenstion or how to meld the two pergolas? Do you want to make sure those steps going up to gravel area aren’t blocked from use or view?

Thoughts about gravel area: What’s under the gravel? Might need to test soil. It does get hot where you live, yes? How about leaving gravel and doing a xeriscape in it? A desert type landscape would be so pretty and can be very colorful. Low watering needs & not much messy leaf drop onto gravel. It would be so much less $ to leave the gravel & work with it. I see a hillside of interesting shapes and colors & maybe the addition of large colorful pots for more color. Something dramatic along the wall maybe cascading over wall to grass side.

Yes, do get in a pro to help with this. I think you could put in one nice terrace up in that gravel space. You could fit two, but it might be a little tight for ease of use. You could easily terrace in quite a bit of garden space if you terrace it and plan it well. Plan in for trellis action on the cinder block walls. Save that gravel- you can use it for paths or the base under paths. You could build up raised beds on your terracing. If you plan for some taller plants at the top of the hill, they could help provide some privacy from that neighbor side. But since that is in a hill and will need some wall and hardscaping to be stable and last, get a pro in.

Where is the electrical hookup outside? Something you will need to consider is running electric to your tub. If you start moving out into the yard, that might mean digging to lay line.

All very good points and thanks for the ideas!

The only window where it won't be tacky to look out to the hot tub is from the primary bedroom (you can see that window, it looks out over the current patio where the grills are). I think if we revamp/reorg and decorate the existing patio to look nice, then do the same with the new hot tub patio with some potted plants, colorful cushions, cafe lights, and with the addition of the privacy screens/curtains, it will be okay.

We've talked to an electrician about running the electric, and they said it could be run outside of the house and along the existing patio cover, or go overground, if we do the hot tub concrete next to the existing patio, but if we go out and try to tuck the hot tub into the gravel area somehow, they'd have to dig. cha-ching

We've had several landscape companies (3-4?) come out and take a look, some of them have landscape architects on staff. Either they don't get back to us at all, or they come back with quotes for things we didn't ask for and don't want, or they come back with crazy high quotes for what I think are boring/generic ideas. It's frustrating!

So we're kind of going for a phased approach now, like 1) get the hot tub pad and hot tub, then from there 2) terracing and retaining wall, then 3) plants and trees and privacy, then 4) paths and such, then 5) the other side of the yard around the shed.

Beth, your phased approach seems like a sound idea. But, I would want to be sure that it's truly a phased approach with an entire overall plan for each piece already in place & not a piecemeal approach. My point is that a plan for the entire yard should be in hand before starting on any piece of it.

My guess is a previous owner leveled your lawn and piled everything on the hill. You'll have a better idea, because you can look at the level of the ground on the other side of the fence. It looks to me like you have a lovely, weed-free space for a garden. What's under the gravel? A weed barrier and then dirt? If so, then you can make it beautiful. I'd start with shrubs large enough to reach the top of the wall. For the lower wall, get plants that will spill over the edge.

But you could do grasses, as well. I love pink Muhly grass, which might be native to you and which can grow to 4 feet all. Big Bluestem will be taller. Add in some cone flowers and some agaastache and you'll have turned your eyesore into a beautiful feature.

If you're not sure about the quality of the soil, you could do a bunch of annuals the first year.

You're certain that doesn't contain a septic mound, right? I might try to cover the whole area up there with decks, maybe different levels and site the hot tub up there...something like this:

Granted, this might be a difficult DIY, but it could be done in phases. Wouldn't have to be this elaborate at all...just showing it to give you some ideas. Make a little sanctuary up there.

Less elaborate would be siting it up there with a nice fence providing privacy.

Even in the lower yard it doesn't have to be an eyesore:

You can easily cover some of those grey blocks with inexpensive fencing.

This video shows how to attach rolled bamboo fencing to block walls

Take up a new hobby - creating mosaic tile details..not hard and can be done a little at a time. :-)

A few thoughts:

I read that concrete block walls can be coated with surface bonding cement, which can be tinted, so it could tone them in with the house color. It seems to be feasible for DIY, rather like painting. (I have no personal experience with this product.) That would be a big job, given the length of wall you have, but it could change the gray to a nicer color. Would building codes allow some sort of wood trellis added on top of the walls for added privacy, maybe with a vine climbing into it?

The area just above the retaining wall would make a great place to grow the vegetables you want. It's a ready-made table-height raised bed, so no bending to plant/weed/harvest! You would have to clear and more or less level about a 3' strip (as far as you can comfortably reach from below), and probably lay some retaining wall blocks (the ones with a lip that just stack, no mortar) to hold back the gravel/earth at the back of that strip.

As others have said, New Mexico has some marvelous native plants that need very little water. Check out "New Mexico's Enchanted Xeriscape Guide" and the "Santa Fe Native Plant Project" on the web, to name just two. Penstemons thrive in your area (unlike where I live!) and are gorgeous! That gravel area could become the most beautiful feature of your yard. I would want to plant several taller, multi-trunked shrubs (New Mexico privet? desert willow? these are taller than needed so a local nursery might have better suggestions) in strategic spots there to block the neighboring windows that overlook you. Then fill in with smaller native shrubs and/or perennials, and I would probably leave a walkway leading from the stairs so I could visit them up close.

As for the hot tub placement, I would look to the gravel area to the right of the patio as you face the back of the house. I know you said you wouldn't want the hot tub near those windows (don't know what room(s) are there), but to me, looking only at the exterior, it's the logical place for it. From left to right facing the house, I see a series of rooms like a house has: kitchen (grills and pizza oven) left of the brick/paver strip under the overhead, then dining room (table/chairs) between the two paver strips, then living room (sofa/chairs) in an extended paved area at the patio door, then a large-paver path leading to a hot tub area set apart on the right. (Love the boulder-surrounded tub in @Olychick's photos!) As inside a house, the order of the outdoor "rooms" needs to make sense. I just can't see a hot tub making sense next to kitchen/dining. I would want it to have its own private space. I'll try to make and post a plan drawing of what I'm thinking, but in the meantime, here's an edited photo that might give you an idea.

(By the way, you mentioned a shed, but I don't see one in the photos. Where is it? And how big is it?)

@simplynatural thanks for the mockup! The windows you're talking about go to my daughter's room, which is why we're trying not to put the hot tub right there. In the photo that you mocked up, the shed was behind me, and I think it's 10x10.

Great idea to paint/coat the concrete wall, and to make the first tier in the hill into the veg garden area! That feels doable, then we can clear/tier and plant another couple of tiers above it, working in tall shrubs, trees, and grasses for privacy and to cover the back wall.

@Olychick thanks for the photos! I love the idea of putting a deck in, especially if it could be a phased plan due to material prices etc.

Beth, here's another option (plan and mockup) that puts the hot tub where you were thinking in the first place. It treats the area outside the sliding door as a central circulation plaza, off of which are the kitchen/dining area (near right), the living area (left), and the hot tub area (far right). I left a small planting area in the plaza to add some greenery, shade, and softness, and to receive the water from the downspout on the existing overhead. (There's one on the other side also for the other downspout.) I would love to see the plaza paved differently than the living and dining spaces (pavers? stained concrete?), but that's an optional detail.

I didn't show living area furnishings other than a rug and your existing chairs in the mockup, but the plan shows a possible arrangement with a sectional, two chairs, and a fire table. The overhead framework can support cafe lights and/or privacy curtains. I left it open to the sky, but it could be more covered if you wish. The framework stands independent of the house roof.

This plan adds a 4' high wall around a built-in kitchen. That, to me, provides enough separation between the kitchen/dining area and the hot tub area, while still allowing conversation between them. Access to the hot tub is not through the dining area, which also helps both to feel like separate spaces.

Construction details: I cut off the rafter tails on the existing dining area overhead, covered the cut ends with an added fascia board, and tied the hot tub overhead framework (to hold privacy curtains) into that. You would have to watch headroom for the beam over the access stairs (or eliminate that beam) and position the hot tub so the beam is over the lower stairs and not the higher ones, while still attaching to the existing overhead. (And yes, I know I put a couple of lightly-scaled trees near the hot tub, which could drop leaves/twigs into it, but I'm assuming it will be covered when not in use, and for me the pleasure of hearing leaves rustling in the breeze and seeing the play of sun and shadow on the water would be worth fishing out a few leaves while soaking.)

This plan does replace some of your grass with paving, but it sounds like you want a polished, gracious patio and that means it needs to be bigger than it is. I'm guessing at dimensions (mostly by counting concrete blocks, assuming they're the standard 8" high by 16" wide), but it looks like there is only about 9' of paving straight out from the patio door to the grass. A 9' room is small inside a house, never mind outside where everything is bigger. There is still grass in this plan, in two areas connected by an optional arbor. The one near the shed could be a play area if needed. (I don't know how old your daughter is or if there are other children.)

This is a long-range plan to be worked on one piece at a time (if you like it), not something that has to be done all at once. As others have pointed out, it's important to have a plan so the pieces can go into the appropriate places as they are added and they will add up to something that makes sense.

Anyway, this was a fun project--thank you for the challenge!

Wow @simplynatural, this is truly above and beyond! Thank you so much for going to all this trouble to help me out. I love the idea of the plaza right outside the door and the new living area with the chairs. For our phased approach, we'll have to do the hot tub pad and placement first, then the pergola over the hot tub (since we've already bought the HT and it's just sitting at the store). Then we'll probably spruce up the cooking space adjacent to the HT area. The next step will probably be the living area. That new living area will be visible from the living room and kitchen windows inside, and even from the front door when you walk inside, so I like the idea of it being polished and covered but still wide open. Lovely!!

I'll be printing these out to show my husband and the concrete company we have coming out to give a quote. :) Thanks again, I really appreciate this. It's so helpful to be able to see it like this rather than in my old rusty imagination.

Beth