always full of cheery news

[Guest guest]

Whenever retail sales are bad, they usually blame it on cold

weather. And now they blame hot weather? But the hot weather has nuthin to do

with global warmin...nope

 

Heatwave keeps shoppers out of US stores

By Jonathan Birchall in New York

Published: August 5 2005 03:00 | Last updated: August 5 2005 03:00

 

US retailers from department stores to teen fashion outlets yesterday

reported disappointing July sales, as unusually hot weather held back

shoppers.

 

" The hot weather came in and really put a damper on those back-to-

school and fall merchandise sales, " said Ken Perkins, of Retail

Metrics, whose index of combined sales figures rose 3.7 per cent in

July, against an expected increase of 4.2 per cent.

 

The month was among the 10 hottest Julys since 1895, according to

SDI/Weather Trends, which helps companies forecast consumer demand.

 

Department stores performed particulary poorly, with Federated

Department stores reporting a 0.9 per cent fall in sales at stores

open at least a year. Nordstrom, the upmarket fashion store that has

been one of the sector's strongest performers so far this year, saw

its shares fall over 4 per cent in New York, after it reported a 3.6

per cent increase in sales, against the 5.4 expected by analysts.

 

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B.C. derailment sparks water warning

Last Updated Sat, 06 Aug 2005 14:17:41 EDT

CBC News

A train has derailed just north of Vancouver, spilling toxic sodium

hydroxide into the Cheakamus River.

 

The spill has killed and injured fish and prompted officials to warn

people to stay away from the river near Squamish.

 

 

===============

 

Homeowners: Upside-down is no way to be

 

Americans own a lower percentage of their homes than in the past,

increasing risk.

August 5, 2005: 12:55 PM EDT

By Les Christie, CNN/Money staff writer

 

NEW YORK (CNN/Money) - So much for the American dream.

 

As more and more people have rushed to be homeowners, they actually

own less of their homes than they have in decades...adding another

risk factor to the overheated real estate market.

 

On average, homeowners have 56.3 percent equity in their homes,

according to Demos, a public-interest research group. In 1973,

equity averaged 68.3 percent; in the 1950s, it was upwards of 80

percent.

 

Two main factors are at work:

 

 

Homeowners are starting off further behind. In the past, the

standard downpayment was 20 percent. A 2003 National Association of

Realtors survey reported than less than half of all home buyers now

put that much down; many obtain 100 percent, even 103 percent,

financing.

 

 

Homeowners are yanking out cash. From 2001 through 2004, Americans

took $330 billion in equity out of their homes, according Freddie

Mac. In 2005 alone, they'll pull out as much as $160 billion.

 

Demos's senior research associate and author of A House of Cards:

Refinancing the American Dream, Javier Silva, said that, even in the

absence of a real estate crash, many families " are facing a

financial crisis, " partially because they've taken on more mortgage

debt.

 

Already, the average American's financial obligations ratio (FOR) --

all your regular bills you must pay each month compared with income -

- has expanded to 18.45 percent. That's up from about 15.5 percent

in the early 1980s, and among the highest since the Federal Reserve

began calculating the statistic.

 

Put to new uses

Until recently, according to Silva, homeowners cashed out home

equity to pay for home renovations, college tuition, or maybe to

start new businesses, all of which are reasonable motives.

 

Today, though, Silva says, many mortgage brokers have convinced

consumers to cash out equity to buy new cars, boats, or other big

ticket items.

 

But using home equity that way, he says, " is extremely risky. You're

pulling equity out of your home – that's your family's security. And

you're mixing bad credit with good. "

 

He means that instead of paying off, say, a car loan in three or

four years, paying for it by cashing out home equity adds the car

cost to your mortgage. With interest rates so low, that may sound

tempting.

 

But over a 30-year, six percent mortgage, that $20,000 car will cost

more than $43,000, including interest, and you can still be paying

for it long after it has hit the scrap heap.

 

Retiring bad debt

Some are also using home equity to pay off credit card debt.

 

Gerri Detweiler, author of The Ultimate Credit Handbook, has mixed

feelings about cashing out home equity to pay off plastic. " Done

properly, it can be beneficial, " she said.

 

Before cashing out, though, Detweiler says your other financial

fundamentals should be on solid ground -- don't take this step if

you just got hit with a big pay cut -- and make sure you can handle

the bigger mortgage payment.

 

And just because you can pay off it high-interest debt with low-

interest debt, doesn't mean you shouldn't address why you're racking

up debt in the first place.

 

If you just keep spending, you'll be worse off, because you won't

have as much home-equity cushion.

 

Code red

Silva worries that if housing prices flatten out or decline, some

newer homeowners who have built up little equity, could find

themselves " upside down " -- owing more than their houses are worth.

 

And, if interest rates rise, homeowners with adjustable rate

mortgages may not be able to keep up higher payments or sell the

house for what they paid. Foreclosures could spike and the supply of

homes for sale soar. That could send real estate market into a

tumble.

 

" That's the scenario I'm most afraid of, " said Silva, " and it's one

that few economists acknowledge. "

 

The thinking is that houses will maintain their value, as they have

in the past, when housing never fell much more than 10 percent to 15

percent. " But prices are much higher than before in many markets, "

said Silva. Overinflated real estate, potentially, has a lot further

to fall.

 

 

 

“If you want a picture of the future, imagine a boot stamping on a human face

– foreverâ€

-George Orwell