Return of Affordability

Implications: 1. Taylor Merger a smart move 2. Pricing returns to Historic norms to move inventory 3. Taylor and Morrison fill each others holes.

Analysis:  

Taylor Woodrow's recent merge with Morrison homes could be the best move the company could make to help spur their US operation. Per the article, with Taylor's average home price in the high 400K range it is no surprise that they are taking a hit. The Florida market is going back to its roots as a tropical, but affordable place to live. The market is returning to the low to mid 200K price range allowing excess inventory to be churned through. It is going to be tough for those middle priced homebuilders to be successful in this down market without developing some lower priced product. That is why this merger between Taylor and Morrison is going to be a successful match as these two UK companies fill holes in each others business models.