Goldman Bets on Housing Recovery

Goldman Sachs Group Inc. (NYSE:GS) is changing strategies and betting on a U.S. housing recovery.

Goldman Sachs notoriously made money during the economic downturn by betting on a housing decline, but now the company is raising capital for the new U.S. Housing Recovery Fund, which will buy home-loan bonds. The fund is scheduled to open on April 1 and will focus on senior-ranked securities without government backing.

According to documents released by the bank, affordability and real estate friendly policies make the U.S. housing market a particularly attractive investment. According to the company, “many of the ingredients are in place for continued improvement in housing.”

Goldman is following in the footsteps of other firms, including Canyon Partners LLC, that started investment pools after price declines. The $1.1 trillion market for non-agency mortgage securities has been buoyed this year by an easing of the European debt crisis, which increased demand, allowing the Federal Reserve to sell $19.2 billion in notes.

To contact the reporter on this story: Gillian White at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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