Due to the abundance of hills and small mountains in the Phoenix/Scottsdale area, many of the most desirable homesites in our area are on the sides of hills. As anyone who has been to the beautiful Medieval towns of France, Italy and Greece has seen, hillside building is an ancient way to build and can withstand the test of time if done correctly. Not only do human beings seem to feel safer when perched on a hill above the potential attack of their enemies, but there are obvious aesthetic advantages to these building sites. They provide the best views and usually more privacy than homes lined up on a street. But another advantage is simply that it takes a more talented architect to develop a plan for such a building site, and you are likely to get a more interesting home.
Downsides to the hillside lot are the added expense of engineering, site preparation (sometimes including the need to dynamite and/or bring in pricey fill dirt), handling water and waste, and the cost of the actual construction itself, which will obviously require a more complicated architectural design.
The orientation of a hillside home can make or break the success of the project (again, a reason to hire an excellent architect). The temptation to orient the home to the very best view has to be tempered with an awareness of what the ramifications are of having many of your windows facing a certain direction. Many of the most successful hillside homes in the Valley of the Sun orient to the South, incorporating appropriately sized overhangs for shade while at the same time allowing for a good flow of natural light from sunrise to sunset. Seasonally, this is also an advantage, since the sun is lower in the sky in the winter when we want more solar warmth, and will come in under the overhangs that are designed to give protection from the sun in the heat of the summer. A well-designed home will be evenly lit with natural light throughout the day, as opposed to requiring the use of artificial lighting in some parts of the day, and the necessity to close drapes for sun protection in others!