7 Housing Stocks to Sell Now

Housing Stock #1 -
Toll Brothers (TOL)

The housing market is in deep trouble. With high unemployment and stagnant wages, many Americans simply can’t afford a house. Lenders are also protecting themselves from bad debt by extending mortgages only to those with the very best credit scores. And to top it all off, most of those people who can afford a home and get financing are choosing not to buy now because prices are still falling.

It all adds up to bad news for home builders and related stocks. And this trend isn’t going to turnaround anytime soon. Protect yourself by steering clear of these housing stocks now.

Low housing starts means fewer sales for homebuilders like industry giant Toll Brothers (TOL).

In the second quarter, TOL missed earnings forecasts by a stunning 64%, when it recorded a loss of $2.93 per share. Until some of the inventory is reduced, I expect housing starts to remain low and homebuilders like Toll Brothers to remain in deep trouble.

Housing Stock #2 -
First Niagara Financial (FNFG)

Rick Sharga, a spokesman for the foreclosed property website RealtyTrac, said the third quarter was “the worst three months of all time” for foreclosures.

That means bad news for many thrifts and mortgage finance companies that have to shoulder the bad debt. Take First Niagara Financial (FNFG). The company has seen quarterly earnings decline each of the last four quarters, with its latest profits falling -43% short of forecasts.

Stocks like FNFG are very bad investments now, and I look for continued trouble in the months ahead.

Housing Stock #3 - Developers Diversified Realty (DDR)

It’s bad enough for the housing market that millions of Americans are struggling to make ends meet. But when obstacles to jumbo loans prevent upper-income residents from buying high-end properties, the market is really getting squeezed at both ends.

Fewer home sales means less business for realtors and companies like, Developers Diversified Realty (DDR). This Ohio company deals primarily in high-end commercial and residential properties. DDR posted a jaw-dropping $1.15 loss per share in the second quarter when Wall Street was expecting a 50-cent-per-share profit, resulting in a -330% earnings surprise. Ouch!

Housing Stock #4 -
Bank of America (BAC)

I don’t have faith in any financial stocks right now due to all this bad debt. But a particularly bad “dog with fleas” stock right now is Bank of America (BAC).

The company swung to a quarterly loss of $2.6 billion on mortgage write-downs, even after being one of the largest recipients of government bailout cash.

I know the stock has bounced back since the March lows, but this is not the time to get greedy. Sell this stock immediately. And remember, until banks become more secure with their balance sheets, they will continue to create a housing bottleneck by restricting mortgage lending.

Housing Stock #5 -
Stratus Properties (STRS)

With prices on the way down, property management companies simply can’t command the prices they once did for land and homes.

Stratus Properties (STRS) is a perfect example. The company has about 1,600 acres under management and development. And every single one of those parcels is worth much less now than it was a year ago.

There is no point holding Stratus at this point in time, with no uptick in the housing sector in sight.

Housing Stock #6 -
Masco (MAS)

Fewer permits mean fewer home constructions in the future. That means business is drying up for building companies, contractors and consultants.

Masco (MAS) provides cabinets, plumbing equipment and other home improvement products to builders all over North America. However, that business has all but disappeared during the housing downturn, and the company is struggling just to break even right now.

Masco is a sell.

Housing Stock #7 - Simpson Manufacturing (SSD)

Small-cap companies like Simpson Manufacturing (SSD) have been hit hard by the slowdown in housing and are in for continued trouble in the months ahead.

The company makes wood screws, metal fasteners and other housing-related products and has seen profits drop by about 90% over the last three quarters. Not good!

And once the tax credit dries up, it could get even worse. Just as we saw auto sales screech to a halt after the “cash for clunkers” program was over, you can expect home sales to take a similar dive. Simpson Manufacturing is a sell.