Over the weekend, Berkshire Hathaway announced that it has come to an agreement to buy Arizona-based homebuilder Taylor Morrison for US$6.8 billion in cash. The agreed-upon price is $72.50 per share, representing a 24% premium over the company's closing stock price on the prior Friday. Once the transaction closes, Taylor Morrison will be delisted from the New York Stock Exchange and become a privately held company within the Berkshire Hathaway conglomerate.
Now, the press release only says so much, but I did find the canned quotes interesting. Greg Abel of Berkshire said that the company wants to "unify our site-built homebuilding operations into a combined platform." And Sheryl Palmer, CEO of Taylor, said the acquisition "will allow us to scale the Taylor Morrison platform in ways that would not be possible as a standalone company.”
Berkshire has a long history in housing. It also owns a manufactured home company (i.e. not site-built), and various companies that make up the housing supply chain: bricks, paint, insulation, roofing, sales, and more. So it'll be interesting to see what they are able to achieve by way of a "combined platform." It has elements of both vertical and horizontal integration.
The other interesting thing about this announcement is that it also seems to signal the following: Abel wants Berkshire to be more of an active manager (finding those "synergies" across its subsidiary companies), and he likely feels the housing market is at or near the bottom of the cycle (despite current inflation risks). Regardless, the US has a structural housing deficit and so homebuilding is probably a good business to be in for the long term.
Cover photo by Josh Olalde on Unsplash
The countdown is on. Our baby girl will be arriving at some point in the near future (we're on her schedule) and so I think you should all expect to see more baby-in-an-urban-condo-related content.
If you're familiar with planning in Toronto, you'll know that there are specific urban design guidelines related to children in vertical communities. (The final 2020 report can be found here.) They include neighbourhood guidelines, building guidelines, and specific unit guidelines, which include, among other things, recommendations for "ideal" family units.
Why all of this matters is that approximately 95% of the new housing built in the City of Toronto today is now multi-unit housing (buildings greater than 5 storeys). Our future is vertical. So even though only about 32% of all households with children currently live in a multi-unit community (Toronto proper figure), it's not hard to imagine this number going up. Either that, or we're left with more sprawl, plummeting birthrates, and a bleak, childless city.
As I was writing this post, I asked my wife what she thought would be the biggest benefits and drawbacks of having a kid in a condo. On the positive side she said she likes the safety of being in a building and our nice walkable, urban community. On the negative side, her mind went straight to stroller management and general space constraints.
Indeed, when you visit friends and they have a driveway big enough to park an aircraft, a basement with a climbing gym for the kids, and bedrooms bigger than many urban apartments, it's hard not to think to yourself, "Yeah, you know what, maybe this would be nice!"
Interestingly enough, neither of us thought once about elevators. We live in a mid-rise building and never have to wait more than a few seconds. Now onto stroller management. Right now, it's sitting folded in our front hall closet:
It fits nicely, but it's obviously going to be work to constantly fold it up and put it away. We'll see how that goes. We are, however, fortunate in that we have two floors in our place, so it is house-like in that there's greater physical and acoustic separation between the main living areas and the bedrooms. We also have a good-sized outdoor space, but a backyard with grass it is not.
Back in the day, I used to enjoy following a blog out of Vancouver called 5 Kids, 1 Condo. Adrian Crook stopped updating in 2020 (presumably his kids grew up), but it was a good example that home is not a housing typology; it's both a physical and psychological space where humans (hopefully) feel a sense of comfort and belonging.
As our urban home grows, I'm looking forward to sharing what we learn along the way on this blog. It feels extremely relevant to the work that many of us do as city builders.
I recently tweeted this photo of St.-Anna-Strasse 16 in Munich (the building in the centre) along with a pithy comment about how I really like the look and scale of this neighbourhood. It's beautiful, right? The tweet blew up and, as of right now, it has over 170k views. Pithy comments with pretty pictures always seem to outperform anything more nuanced that I might share. But in the spirit of yesterday's post about housing affordability, let's dig a little deeper.
Developed by Legat Living and designed by Munich-based Landau + Kindelbacher, the mixed-use building is located in Lehel, which I understand is one of the most desirable areas in the city. It's about 960 m2 and has five apartments (ranging from 140 to 200 m2) and one commercial unit at grade. Each home has direct elevator access and its own landing. To give you a better sense of the suites, here's a photo of the rear elevation:
What is clear is that this is a luxury, boutique offering. Based on a cursory review of the Munich real estate market, Lehel seems to be the most expensive neighbourhood, with an average apartment price of €12,468.33/m2. If we apply this average to their smallest apartment, that's a starting price of €1,745,566. But presumably, this isn't your average building. It was completed in 2020, so I'm going to assume these homes sold for meaningfully more.
All of this leaves us with a really beautiful building and a nice urban scale, but certainly not the secret to a magically affordable city. This is not a criticism of the project by any means. I stand by my original tweet. It's a beautiful development, but it does demonstrate some of the affordability challenges of building urban. Legalizing urban infill housing is not a silver bullet in and of itself.
Photos via Landau + Kindelbacher