demonstrates that Colorado Springs has the highest vacancy rate in Colorado; 34% above the state average.  This will take some time to absorb.  Many media outlets are publishing stories about the timeliness to invest in houses and become a landlord.  Rents have not fallen as quickly as home prices making it possible to quickly yield annual returns near 10%.  During the peak of the recent real estate market, the WSJ reports annual returns were near 6%.  While this is an attractive return compared to the stock market, investors must be aware of the risks and entry fees.  Often, lenders want up to 50% down payment. The risk of a double dip recession means that investors must be prepared for a potential vacancy.  A quick sale is out of the question because the days of flipping are over; expect to hold for three to five years.

This week's wrap-up looks at weekly survey of average mortgage interest rates across the country.  The average 30 year fixed mortgage dipped back below 5% to end the week at 4.93% with an average of 0.7 points down.  The 15 year fixed mortgage also fell a bit to 4.33% with 0.6 points down.  According to the Mortgage Bankers Association, 69.7% of all mortgage activity is refinance of existing sales.    To check out the latest listings that have come on the market, check out Springshomes.com

Could the best-performing sector fund be associated with real estate in spite of real being the leading domino in the collapse of the economy?  Yes.  A fund called U.S. Home Construction Index Fund (ITB) on the Dow Jones invests in new construction companies and has a year to date total return of 10.5% according to Morningstar, Inc.  The fund is $330 million in size and doesn't use leverage.  Lennar Corp is the largest single holding within the fund and is up 32% this year.  Lennar has posted losses for two years and surprised investors with fourth quarter earnings report.  (Lennar is at the center of a controversial financing deal with the FDIC for an investment in delinquent residential loans.)  The SPDR S&P Homebuilders ETF (XHB) is up 6.5% but is not as heavily vested in homebuilders in spite of its name.  The nonsensical activity of these funds against the stalled economy and fears of a double dip recession is an indicator of just how volatile the recovery is.

The U.S. Treasury has release numbers about the success of HAMP; an initiative of the Obama administration called the Home Affordable Modification Program.  The Treasury estimates that 1.7 million are eligible; 947,000 have been helped.  HAMP is designed to incentivize lenders to modify mortgages and help borrowers in trouble.  The program seeks to decrease interest rates and extend mortgage terms to reduce the monthly payment.  The borrower is provided a three month trial to ensure they can meet the demand.  Once the ability is established, the modification is finalized.  As of January 30, 116,000 individual loans had been permanently modified.