Berkshire Hathaway’s multibillion-dollar buy of Taylor Morrison to boost US housing market

Berkshire Hathaway’s all-cash acquisition of home builder Taylor Morrison for US$6.8 billion is likely to trigger more investment in the US housing market, as institutional confidence in the segment encourages more home purchases in the world’s largest economy by local and overseas buyers, according to analysts.

The US-based conglomerate made the investment in May, deepening its bet on the US residential property market.

It marked the first multibillion-dollar acquisition under CEO and president George Abel, who was appointed to his current post in January after chairman Warren Buffett stepped down from his post overseeing the group’s operation.

“A cash-holding Chinese or Hong Kong investor can use the same logic to buy a single American property or a housing-related company with a decent yield,” said Kashif Ansari, founder and group CEO of Juwai IQI, which serves Chinese and other Asian buyers seeking overseas properties.

“Will other institutional investors follow the lead? Yes, undoubtedly,” Ansari said. “People who follow the housing industry see consolidation in the works. That means smaller companies are being bought up, all other things being equal, bigger ones.

“Ultimately, there will be fewer American housing companies out there, and they will have bigger balance sheets.”