Happy Valley is an unincorporated community and census-designated place in Eddy County, New Mexico, United States. As of the 2020 census, Happy Valley had a population of 617. The community is located on the western edge of Carlsbad; New Mexico State Road 524 passes through the area. The town was settled as a farming community before potash was manufactured here. It was named because the lack of land use regulations made residents happy.