Innovating a Solution

Destiny Homes answers the demand for entry-level homes.

“If you’re not part of the solution, you’re part of the problem,” the saying goes. After years of hearing the frustration in the industry over the lack of entry-level new homes, not a lot of answers have been proposed. Many believe no solution is possible.

But Destiny Homes is doing more than offering suggestions. The builder has spent two years working on a solution. And Destiny is getting results.

“We’re a custom home builder,” says Destiny’s Dick Moffitt. “But we keep hearing about entry-level buyers desperate for new homes. If there’s that great a need, shouldn’t we try to figure out how to meet it?”

Moffitt and managing partners Dan Sparks and Wade Hiner didn’t realize an easily identified need doesn’t necessarily lend itself to an easy solution. Over the past 24 months, the team at Destiny has been, in effect, reinventing the entire development and building process.

“When we started on this, we didn’t know how to get there,” Moffitt says. “We have a good understanding of the industry because this is what we’ve done our entire lives. But this is the biggest undertaking I’ve taken on in my lifetime of building houses. We really started with a blank slate and had to figure out how to do things all over again.”

According to Sparks, “What we did when we started talking about addressing this price point was go out and talk to cities and developers. We got the usual message—it can’t be done. So we took a long shot and made an offer on this land in Grimes. At the same time, we reached out to other developers. And while we were designing plans, we were designing lot sizes and working through city approvals.”

For all the reasons that others in the industry have believed it’s no longer possible to build homes below $250,000—land is too expensive, city requirements are a financial burden, materials have become too pricey, home buyers demand spacious modern plans—the Destiny team members had to reeducate themselves and everyone else to find answers to all those objections.

Sparks says, “All of this is new. We’re innovating the development process as well as the plans. There’s not a box that this fits in. We had to have the price point in mind to begin with and then get all the other pieces to fall into place to make it work.”

Hiner adds, “In addition, the cities have to recognize that there’s a need and that there’s not an existing answer.”

Once they recognize that, municipalities are willing to look at ways to resolve the issue. Communities that are not growing as quickly as they’d like—even communities that are seeing dramatic population increases—are facing the same crisis. They struggle to attract essential workers because housing is not available at the lower price points.

“Every community needs teachers, policemen, firefighters, hourly workers,” says Moffitt. “But if those workers can’t afford to live in that community, then they will go work somewhere where they can find housing.”

Even when a municipality is interested in adjusting development requirements, Destiny found it had to show city officials and developers that creating attractive communities with a denser lot plan is possible. Straightening streets, eliminating cul-de-sacs, and reintroducing the smaller lot concept that was more common decades ago all allow developers to build more homes per acre. But creating an appealing yet affordable home for those neighborhoods presented another challenge.

Because Destiny was targeting a particular budget, every step of the new development process had to be taken with this in mind. But price was not the only objective. “We’re targeting a price point, but a price point with quality features,” Sparks says. “Our goal was to keep the value without taking out any of the features homeowners want.”

To achieve this, Destiny had to get developers on board and create plans that met both the expectations of today’s buyers and the requirements of city officials. Destiny’s right-size plans boast contemporary elevations, top-quality materials, and value-added features such as fireplaces, daylight lower levels, and HardiPlank siding.

While continuing to improve on these plans and apply the same innovation to its higher-end homes, Destiny has been working with subcontractors to develop the same value-added efficiencies to the construction process itself.

“We want to help them do their jobs here simpler than anywhere else,” Moffitt says. “We have the same subs working on our $500,000 homes that are building our entry-level properties. It’s the same quality.”

The change has not come in the level of craftsmanship but in the efficiency of the process, he says. By fine-tuning its master schedule and home plans, Destiny is able to schedule trades weeks in advance.

Moffit says, “How we all make money is by working more efficiently. Each sub gets 100% done, then moves on. He doesn’t have to come back and forth and spend a lot of time waiting.”

“It takes a lot of working together,” Sparks says. “Between builders, developers, cities, realtors—everyone has to buy in or it doesn’t work. And to attain affordability, we had to get our trades on board, too.”

Destiny also had to streamline its own processes. Hiner explains, “Our S.M.A.R.T. series plans give homeowners packages from which to choose, which makes the decision-making process easier for the homeowner and makes our internal processes more efficient. That saves the home buyer money as well as time. “

Moffitt says, “Over the past two years, we really became students again and had to dig far deeper into our industry than we ever had before. What’s taken place in the past 10 years is that builders have ignored the lower price point market, and that’s affected every other level. If you don’t have this level of home, pretty soon you don’t have buyers for the $300,000–$500,000 homes either.”

Rethinking the entire approach to all neighborhood and community development is critical not just to builders and developers. It’s also crucial to the overall economy of the local community as well.

“People don’t build into a community if they just work there. They build into the community where they live,” Sparks says. “If you provide homes at every level, people will buy their first home there. And they’ll stay in the community when they’re ready to move up and then later on when they’re ready to downsize.”

To date, Destiny has applied this new approach to three developments in Grimes, Urbandale, and Pleasant Hill. The builder broke ground on the first homes this past March; 78 have been sold already. An additional 70 lots are available; hundreds more are in development.

Destiny’s success has not gone unnoticed. “We’ve got municipalities from all over the state asking how we’re doing this,” Hiner says. “They’re trying to draw new businesses to their communities. And they recognize that they need to create quality, affordable housing to support those economic-development efforts.”

In some ways, what Destiny Homes is doing is a return to building neighborhoods the way they used to be built: homes of all sizes and price points to meet the needs of everyone in the community, from first-time buyers to retirees. But decades of building bigger homes on larger lots in sprawling neighborhoods changed the way the construction industry approached home building.

“We’re all guilty of being part of the problem,” Sparks says. “We have to be part of the solution.”

That’s exactly what Destiny Homes has done.