Realty Bites: Housing-Related Stocks Being Targeted by Short Sellers

Generally speaking, Wall Street is welcoming the Fed's next round of quantitative easing with open arms. The estimated $600 billion T-Bill buy-up has many investors running to bullish positions, eager to ride the expected bubble.

But if you're hoping to see a positive effect on the slumping housing sector, don't get too excited. Best-case scenario, lower interest rates give real estate a temporary boost. But then again, interest rates are already low -- unless you're offering these rates to homeowners underwater, or with less than stellar credit, it probably won't make much of a difference.

At least, that's what Barry Glassman of Glassman Wealth Services has to say, in an interview with CNBC. Because it's not as though the banks don't have cash to lend -- it's that they have little incentive to do so. In effect, QE2 puts a band-aid over a bullet wound, addressing the symptoms without treating the underlying cause.

The truth is, there's probably no quick fix for what's ailing the housing market. According to Glassman, "the challenge right now for homeowners is that the future looks so uncertain. The future of interest rates, the future of home prices, and the future for the value of that loan to those who securitize them." And in his opinion, as bad as things are, the sector still hasn't hit bottom.

The overall housing economy might be in bad shape -- but which of the sector's stocks are walking around with bulls-eyes on their backs? One way to find out is to look at what the short-sellers are up to.

Unlike most investors, short-sellers actually bank on a stock decreasing in value. They borrow shares from other investors and sell them on the open market, creating an inflow, and eventually close the short by buying back the same number of shares they borrowed. If they can buy back the stock at a lower price, they turn a profit off the difference.

So if short-sellers are flocking to a stock, it's a fair indicator that they think its price is about to head south. (Click here to access free, interactive tools to analyze these ideas.)

Here's our list of eight housing-related stocks that saw a significant increase in shares shorted over the last three months. Short trends data sourced from AOL Money. The data has been sorted by short float.

Interactive Chart: Press Play to see how analyst ratings have changed for all the stocks mentioned above.

Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.