Dive Brief:
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CalAtlantic Homes, the country’s fifth-largest homebuilder by closings and fourth-largest by home sales in 2016, staked a flag in the Seattle market with the acquisition of Washington developer and builder Oakpointe, the company announced this week.
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The move gives CalAtlantic 1,750 homesites in 19 planned communities, of which seven should be selling by February 2018. The company operates across more than 40 metro areas in 19 states. Oakpointe’s Seattle division president, Ryan Kemp, will lead CalAtlantic's operations there.
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Not included in the acquisition was Oakpointe’s land development business. CalAtlantic said the acquisition fulfills a longtime goal of entering the Seattle market, which is attractive for its strong economy and job market.
Dive Insight:
CalAtlantic, which was formed from the 2015 merger of The Ryland Group and Standard Pacific Homes, has had a busy spring. Last month, the builder announced plans to open a division in Utah this summer. As with Seattle, CalAtlantic pointed to Utah’s strong job market, along with its growing population, as reasons for investing in operations there.
In April, the company bought 739 fully developed homesites from Mattamy Homes in nine communities across Minneapolis and St. Paul, MN. The strategic move grew its stake in the Twin Cities, where it was already one of the most active builders. Earlier that month, the company made a splash by opening six communities in a single weekend across Atlanta, Austin, TX, Chicago, Houston, Minneapolis and San Diego.
In a call with analysts last month to discuss the company’s Q1 financials, CalAtlantic CEO Larry Nicholson noted that acquiring and developing land will be a key focus for the company and its “primary use” of capital.
Other builders, too, are vying to lock down land. Sixty-seven percent of respondents to a December 2016 survey by the National Association of Home Builders and Wells Fargo said that the cost and availability of developed lots would be a concern this year, up from 60% who said the same for 2016 and 21% for 2011. That was followed by concerns about fees for utility hookups and inspections among 61% of respondents for 2017.
Land in the Seattle market is scarce, with development focusing on tear-down and infill projects. That, coupled with the region’s strong population growth and active tech sector, has heightened tensions in the city's housing market. According to CNN Money, homes there are spending 25 days on the market while seeing the strongest price growth of cities nationwide.