The U.S. subsidiary of the Japan-based homebuilder Daiwa House Group entered the U.S. single-family market last week with the announcement of plans to buy Washington, DC-area homebuilder Stanley Martin for $251 million, according to the Washington Business Journal.
Daiwa is Japan’s largest homebuilder. It has previously been involved in multifamily rentals in the U.S.
Stanley Martin had revenues of roughly $500 million for the 12 months ending Sept. 30, 2016. It sold 902 homes and closed on 821 during the period. The company controlled 8,700 lots as of Sept. 30.
Daiwa is also active in China, Southeast Asia and Australia, and it is eyeing the growth potential in the U.S. market with its move to the Mid-Atlantic. Stanley Martin is also active in Richmond and Charlottesville, VA, as well as Raleigh, NC, in addition to DC.
One reason for the move, notes Builder’s John McManus, is that Japan’s population is shrinking and new households aren’t forming fast enough to generate enough of a return. The U.S. is proving a better bet, as Daiwa is joined by other Japanese building industry companies that have established a foothold in the U.S. through acquisitions.
Meanwhile, costs to build in the U.S. are keeping many builders at bay. The National Association of Home Builders reported in May 2016 that lot availability was at an all-time low, with nearly two-thirds of builders saying supply in their market was low. Additionally, regulatory costs can add up to $100,000 to the price of a new home, CNBC reported in May.
After months of a tight inventory environment and affordability concerns, pent-up demand for new and existing homes is slowly trickling out. The national homeownership rate ticked up in the third quarter to 63.5% from 62.9% in July, pending home sales rose 1.5% in September and sales of previously owned homes climbed 3.2% for the same period on the strength of first-time buyers. New-home sales also rose 3.1% from August to September.