Thanks to many years of efforts to strengthen product appeal, enhance marketing abilities, and improve profitability, the year 2000 marked the turning point for TMC's Housing Group. For the fiscal year, TMC achieved profitability on an unconsolidated basis, and finished first among detached home providers in Aichi Prefecture for the first time. TMC continued to maintain this leading position in subsequent years, and in fiscal 2007 (ended March 2008) was No. 1 in the Tokai Three-Prefecture Block, which comprises Aichi, Gifu and Mie prefectures.

Against this background, TMC established Toyota Housing Corporation in April 2003, transferring its product planning, marketing planning, land lot selling, and construction functions from the Housing Group to the new company, with the goal of quickly and accurately understanding customer needs and planning and selling products on a timely basis. Toyota Housing commenced operation in January 2004.

In December of the same year, the Toyota Dream House PAPI,1 which had been jointly developed by Toyota Housing Corporation and 21 other affiliates, was completed in Nagakute-cho, Aichi-gun (now Nagakute City), Aichi Prefecture. Toyota Dream House PAPI was opened to the public in synch with the 2005 World Exposition, Aichi, Japan, which opened in March 2005.

In 2005, TMC established a capital alliance with Misawa Home Holdings (now Misawa Homes Co., Ltd.) by purchasing new shares issued through a third-party share allocation. The goal of this alliance was to achieve synergy with Misawa Homes through collaboration in development and marketing as well as supporting each other with products. Subsequently in 2010, Toyota Housing also purchased shares in Misawa Homes, building an even tighter working relationship.

After the establishment of Toyota Housing, TMC transferred its housing product development function to Toyota Housing in 2008, and made the decision to also transfer all remaining functions of business planning, technology development, and production in October 2009. By integrating all housing functions as of October 2010 in this way, Toyota Housing was given a fresh start to further increase its presence in the housing industry as one of the core companies of the Toyota Group.