Housing sector recovering at steady pace-NYSE:GS

Goldman Sachs Group, Inc (NYSE:GS) survived the real estate recession five years ago, to see the housing sector recover again.

The action taken of betting derivatives against subprime mortgages helped Goldman Sachs Group, Inc (NYSE:GS) to survive the real estate crash, thus enabling it to promote the opposite trade to clients such as ABX indexes.

Goldman Sachs Group, Inc (NYSE:GS) along with other four dealers created a contract to attract clients to buy derivatives by assuring them protection against risk of market crash.

After a long six year slump now the prices are recovering and market demand for properties has found a way to buyer’s mind.

Its share price increased tremendously, almost double the price prevailing a year back by the positive push of the Federal Reserve.

The housing business expects a further lift by seeing the indices increasing eventually.

More Bullish

By this contract speculators are encouraged to get into the business and bet against the housing.

Hopes grew in the market with the news that Goldman Sachs Group, Inc (NYSE:GS) raising funds to buy some home loan bonds.

Ripple Effects

Investors should see the cascading effects of the contract.

Apart from housing stabilization, it helped ABX Indexes and US domestic bank a lot, which resulted in reforms in the US economy and money markets. Its shares are marked with a rating of AAA and went up by 39%.

Big Short

The team sold the bonds of subprime and collateralised the debt. By the end of Feb 2007, they reached to a peak position of about $13.9 billion.

Levin Questioned

Levin expressed his concern to Goldman Sachs Group, Inc (NYSE:GS) executives that whether any bet against client were done when the customers were sold the mortgage linked securities, to which the bank replied in negative.

The firm paid $550 million to settle the fraudulent lawsuit against it.

Birnbaum Gains

Birnbaum of Tilden Park capital management LP managed to gain 34% in the October current year.

Lippmann’s of the LibreMax capital LLC earning went up by 19% in the October current year. Through the two years from 2005 to 2007 its debt loss was 5.5%

Home Prices

Home prices went up by 3% as compared to 2006 and have been forecasted to a further gain of 5% for the coming year.

Broader Unemployment

Due to the housing recovery the demand for new house sale is declining thus hitting the market and growth in the economy. Prices of new homes declined in October.

This created an unemployment condition in the new housing business which is a hindrance to the global development.

According to a report they found 6% jobless in this housing industry.

The share price of Goldman Sachs Group, Inc (NYSE:GS) is down by 0.79% to close at 117.79 USD

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Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.

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