Since adding thousands of houses to the game world would be unrealistic and everyone entering "their" house at the same external graphical house isn't very appealing I thought maybe we should have a portal to our home. When I first did Crow's Wood, back near launch, I was quite fascinated by this "pocket of oblivion" idea and combining it with player housing seems a very fun option. Our own little extra-dimensional house and yard:)

I think you could make this type of housing quite versatile with many options to choose from so each player (account) can customize a home for their characters.

1. Each pocket of oblivion would be divided into sections and the player could select from a number of options for each section (but not have all the options - possibility to change choices should be at considerable cost - renovations!)

2. Environment: choose from an overall theme based on the current in-game environments. Marshy, Desert, Coastal, Mountains, Snowy, etc. The weather effects associated with this environment could also be added OR the sky could keep the oblivion-esque swirling and such. It is a magical pocket of oblivion so I don't think modifying the sky would be out of reach.

3. The House: Allow the players to choose from any racial style seen in the game, from Bosmer tents/giant trees to Argonian Mud-Huts. Also, allow for simple and complex housing choices. For example, let the player choose between having a barracks style bedroom setup or rooms for each character. Simple one room houses with open floorplans to the larger "castles" seen in game. The premise here is that all the floorplans exist (or mostly exist) already in game. For some housing styles larger floorplans would likely need to be added or a modified version. For instance, argonian mud-housing is largely simple, instead of a "castle" a small village-like 'house' would be more appropriate with various small buildings as bedrooms and a larger one as a common room AND/OR allow players to select the more ancient Argonian architecture. (I should say that ancient elf, daedric, dwemer, etc should be included in the racial styles available as this architecture does exist in the game).

4. Inside the House: Since the house is account bound I thought having rooms/beds for each character would be a very nice feature. Even more interesting if the characters not currently logged in would be sleeping when walking through on another character. This could be an option however, as some players only play with one character and could thus make it just their house, 1 bed etc.
* As with the outside some features will likely not be available if you choose others.
* The house should include the basic features such as sleeping areas, kitchen areas and common area.
* some armor mannequins (function like a small bank, place armor items you want displayed in them and they appear on the model, the race and gender of the mannequins should be selectable - ie. when you purchase the mannequin from your mage-housing-crafter-npc you would select 'altmer-male' or 'khajiit-female'.
* Quest-Aware displays, one of my favourite features in Skyrim house mods, as your character completes quest (and related achievements in this case) certain displays in the house update. This can be dynamic or you can have the player make notes in a 'diary' that will then update the displays. Since there are multiple characters living in the house, you could have multiple display areas, it could be in their personal bedrooms, or you could have a toggle where you could select which character's achievements are being displayed. For this feature it is neat if the items display randomly, like a book is added to a table or a banner to wall, something to a shelf and such, but perhaps and option to display all the items in one wall display would also be available. I personally prefer the look as if your hero came home and just added the item to the room.
* A selection of weapon racks should also be available, operating similar to the mannequins.
* Positioning of furniture etc, I think it would be easiest if the npc you buy from offered a small selection of room layouts, as much as we all would love to place furniture wherever we want I am not sure how easy that would be to implement.
* Additional Rooms/Features: Trophy room/walls (display collectibles/fish), Armory (add additional mannequins/weapon racks, archery targets/target dummy: useable?), Library (include enchanting lab, some respawning soul gems to loot, and very mage-esque decor, welkynd stones, desks with research notes etc), Laboratory (alchemy lab indoors with a small selection of harvestable plants, purchase planters from npc 'lady's smock planter' etc), Indoor Bathing Room (another fan favourite from Skyrim house mods, a hot pool/tub/shower. this may require more work since I haven't seen too many things like this in game, and each racial style would need their own 'model'. Pantry, for the provisioning fans, has shelves that periodically restock. I LOVE the interactables added in 1.6, such as taking Rabbits and Fowl from their hanging ropes, garlic from strings, etc..it is really fun.
* Vault: interactable banker for the player to use.
* Thieves Den: Your personal fence! and some associated decor:p and some lootables such as lockpicks and a practice chest of each difficulty so you can hone your skills if needed.

5. Outside the House: Again there should be a lot of choices, but you cannot choose them all.
* stable/farmyard: adds stable and pen where all of your owned mounts will be wandering around. Also adds sheep/goat/pig/chicken/guars/etc that you can slaughter for provisioning ingredients and will respawn periodically. Some apple trees, corn stalks, other harvestable vegetable/fruit plants that occur around the world will also be growing here. As well as your own stablemaster (should you choose to have him/her).
* Crafting area: choice of a specific set crafting station, clothing, smith, woodworking, pretty much set up like the ones you see in the wild, depending on your environment chosen will vary in layout etc, could have a respawning selection of materials on storage shelves (raw or refined) that the player can pick up, won't be too many mats to make the selection of this section overpowered but will add some flavour to the section. Say a set of shelves with each a "stack" of each ingot visible and player can pick up 5 of them if they loot it, and then the "stack" vanishes.
* Alchemy Garden/Lab: if you aren't the indoors alchemy type person, grow an alchemy garden outdoors with an outdoor lab under an awning/tent/etc. Has more growing room for plants than the indoor lab.
* Bathing area/spa: A hot spring/outdoor bath area with decorative garden/surroundings.
* Market area: adds stalls and npcs for the player to use. Repairs, general merchant, grocer, crafting merchants etc Should be able to choose from a small variety of traders, such as the Baandaari, Dragonstar and such.
* Fishing Pond: respawning fish pools for the player to fish in, water type depends on environment (some locales may have a river rather than a pond), bait needed to catch the fish can be found in some quantity around the area. Either in cans (worms) or as bugs flying around etc.
* Smuggling Tent: adds a Fence and some associated decor:p and some lootables such as lockpicks and a practice chest of each difficulty so you can hone your skills if needed. Maybe even a pickpocket "dummy" so you can see how that works/practice.
* Wayshrine: personal wayshrine to use (free of charge?)

6. Other:
* any vanity pets the player owns should be randomly found around the house/yard.
* as often as possible different elements should be purchased separately to add to customization and different layouts where possible.
* should not be able to build in a day, player has to invest some time into building/creating the house and yard areas. Same with renovating, removal of old stuff takes 1 day, new addition takes a day. Adding furniture and such should not take so long.
* options to bring npcs into your home (although may need a "servant's quarters" addition to make that logical. (ie chef, brewer, house cleaner, dancers, bards, etc)
* accessible via portal in cities?
* add some general options like "outdoor lighting," adding wildlife (appropriate to environment)

7. The general idea is to take elements that already exist in the world (mostly) and combine them based on the player's choice into a custom home. This should decrease the amount of new artwork/animation/etc that needs to be done to make the home/yard.

I am sure I missed some points people find important in a house/yard, but this would be my dream ESO player housing!