The Housing Bubble

The San Francisco Chronicle reports from California. “Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.”

“It was unclear for how long the loan servicers would freeze the interest rates.”

“‘The word that was chosen is it’s for a ’sustainable’ period of time,’ said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. ‘What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that’s going to be.’”

“‘With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists,’ the governor said in a statement. ‘This common-sense approach does not involve a government subsidy or bailout.’”

The Sacramento bee. “Those homeowners who already have missed payments and who are threatened with foreclosure don’t appear to benefit from Tuesday’s agreement.”

“Regionally, 6,528 households have gone into foreclosure from January through September in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported.”

“About 11 percent of all home loans in El Dorado, Sacramento, Placer and Yolo counties are subprime, according to First American Loan Performance.”

“First American Loan Performance says 12.3 percent of all California adjustable-rate loans are resetting during the last quarter of 2007. The number gradually slows next year, with 8 percent scheduled for resets in the first quarter and 6.4 percent in the second quarter. Another 7.29 percent will reset higher in the second half of 2008.”

The Times Delta. “Not only does the state lead the country in the highest number of foreclosures, at 51,259 in September, the governor said, but seven of the 16 metropolitan areas in the U.S. with the highest foreclosure rates are in California.”

“‘Mistakes have been made by both sides — by lenders and by borrowers — but this will minimize the pain for everybody,’ he said.”

“The interest rates would, after a period of between two and five years, eventually go up.”

“Michael Salierno, VP of Provident Mortgage in Visalia, said some lenders will feel it, although he didn’t think it would be a ‘devastating’ blow.”

“‘They were banking on the fact that they were going to receive [a higher rate down the road] and what they’ve been banking on is not going to happen,’ he said.”

“Bob Keenan, CEO of the Home Builders Association of Tulare/Kings Counties…wondered how long it will last.”

“‘The homeowners can’t end up never having to pay market interest rate, because what would that say to everyone else who does?’ he said. ‘There’s relief now but at the other end they’re going to pay.’”

From ABC 7 News. “The governor worked out an agreement with four of the major sub-prime mortgage lenders to stop those rates from adjusting, at least for a little while.”

“‘I have nowhere else to go.’ ‘Al’ didn’t want us to show his face on camera because the prospect of losing his home is just too embarrassing. The adjustable rate on his sub-prime mortgage will reset in January, spiking his monthly payments up by another $1,000.”

“‘They ballooned the rates so high that it’s incredibly hard for even two people that are working to afford their house payment,’ says ‘Al.’”

“‘Right now I have six foreclosures listed, but there are companies out there that … that’s all they deal with is foreclosures, and they’ll have 200, 300 listings of foreclosures,’ says Belinda Mills, a Stockton realtor.”

“‘Al’ doesn’t want to be part of that statistic and has already asked HomeEq not to raise his rate. Now, he’s crossing his fingers, waiting for approval. ‘The home represents the future for me and my family,’ says ‘Al.’ ‘I’m going to fight all the way.’”

The Orange County Register. “The folks at online house tracker Zillow have a fun new stat. Well, it’s really a sad, new stat: They’ve estimated, by major metro region, how many buyers in the past year (ended in September) that have no equity left in their homes.”

“Here’s a sampling: Nation’s worst? Merced, at 72% of past year’s buyers. SoCal (LA-OC-Ventura-Riverside-San Berdoo)? 35.4%. National average? 15.6%.”

“For the 22 business days ending November 8, sales for all types of Orange County home sales decreased 43.5 percent. The median sales price decreased 8.6 percent.”

“Delia DeYulia was recently forced to take her first retail job. For the holiday shopping season, DeYulia is working part-time at Kohl’s, placing clothes on racks and cleaning dressing rooms. She resorted to taking the temporary work after not finding other employment.”

“After 15 years with Fremont Investment and Loan, she lost her mortgage job in Anaheim Hills in March.”

“‘I’m used to sitting in an office,’ said DeYulia, who audited loans at Fremont. ‘Now, I’m on my feet all day. I’m carrying a lot of stuff and my body has to get used to it. It’s hard work for a minimum-wage job.’”

“DeYulia’s position was one of 3,800 mortgage jobs cut in Orange County from Oct. 2006 to Oct, 2007, according to the state’s Employment Development Department. Many of those laid off have reluctantly turned to retailers for jobs to help pay the bills.”

“Robert Harrington and Shad and Corinna Vickers, are looking for retail jobs. Harrington of Tustin, was let go in September from Bankers Mortgage in Santa Ana. As its loan originator, he made about $75,000 last year. More than half of that was from commissions.”

“That’s why he thinks his best bet is to find a commission-based job at a luxury retailer or a store that sells big-ticket items. ‘I just need a commission-driven job because it’s better than hourly,’ he said. ‘I need the benefit of being able to make more money.’”

“Corinna Vickers was let go a year ago from Secured Funding in Costa Mesa. Then two months ago, her husband Shad Vickers, lost his job at Lending Tree in Irvine.”

“Combined, they had been making $200,000 a year.”

“Now they’re both unemployed and have been hunting for work to pay their bills and help them save for retirement and college tuitions for their four daughters. They have not had any luck and now the Vickers are both willing to take on holiday retail work.”

“‘I need to stop thinking about a career and start looking for a job,’ said Shad Vickers of Tustin.”

“Rhonda Struman of Laguna Niguel is not waiting around to get hired full time. Last month, she began working as a part-time salesperson at Nordstrom at The Shops at Mission Viejo. It pays $8 an hour. Before she was laid off in August from her underwriting position at Paul Financial in Irvine, she was making about $70,000 a year.”

“Her husband also got laid off from the mortgage industry. He was pulling in about $130,000 a year. Now, he’s working for $11 an hour at a Costco in San Juan Capistrano.”

“Because of their huge pay cuts, they’re having a hard time paying their $3,400 monthly mortgage. They sold off their boat to get rid of the monthly payments. They will soon sell their furniture.”

“‘I cry all the time and I’m stressed all the time,’ Rhonda Struman said.”

“By February, she and her husband will leave Orange County for Colorado to look for mortgage jobs or work that pays better than their current employers. They’ll rent out their Laguna Niguel house to help pay the mortgage and then rent in Colorado.”

“‘We have no choice,’ said Struman. There’s too much competition in Orange County. ‘There are too many people out of jobs’ who are looking for new work.”

The Press Enterprise. “Riverside County property owners who believe the market value of their property has fallen below its assessed value have until the end of the year to file an application for changes in assessments on their tax bill.”

“County Assessor Larry Ward extended the Nov. 30 deadline for the application in the wake of plummeting home prices and a real estate market where the Inland region is experiencing the third-highest rate of foreclosure activity in the nation.”

“Ward said the precipitous slide in home prices began in the spring so many property owners won’t see a decrease in their tax bill until next year.”

“Earlier this year, Ward’s office reassessed 31,333 properties, which resulted in a $610 million reduction in their assessed value. Many of those properties were purchased during the height of a red-hot housing market in 2005 and 2006.”

“But John Green, a Temecula real estate agent and Menifee homeowner, said the system does not accurately reflect the property values of thousands of properties. Green said the county stands to reap tens of millions of dollars in overpayments from unsuspecting owners.”

“Green said many home prices have slipped by 25 percent or more. He has appealed the assessment on his own Menifee home.”

“And Green said there are a lot of great deals on the market for qualified buyers. ‘It’s just a shame so many people are being overassessed,’ Green said.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Home prices fell in one third of U.S. cities last quarter as stricter lending standards caused a 14 percent decline in sales nationwide. Prices dropped in 54 of 150 metropolitan areas in the third quarter and the median sales price tumbled 2 percent nationwide, the National Association of Realtors said today.”

“Home sales, including single-family properties and condominiums, slid to 5.42 million at an annualized pace from 6.29 million a year ago.”

“Palm Bay, Florida, had the biggest price decline in the third quarter, tumbling 12.4 percent from a year earlier. Sacramento, California, fell 10.5 percent and Sarasota, Florida, dropped 10.4 percent.”

The Associated Press. “The Realtors though saw a silver lining in the data, noting that home prices rose in 93 of the 150 metropolitan areas surveyed.”

“‘Some metro areas are hot while others are experiencing localized problems,’ Lawrence Yun, the group’s chief economist, said in a statement. ‘Home prices in the vast midsection of America, from the Appalachians to the Rockies, are affordable and, perhaps, even undervalued.’”

“Freddie Mac, the second-largest U.S. mortgage-finance company, may need to raise as much as $6 billion to bolster its capital amid the worst housing slump in at least 16 years.”

“The government-chartered company yesterday said it would seek more reserves in a ‘large transaction,’ after reporting its biggest quarterly loss. The amount may be $5.5 billion to $6 billion, according to Fox-Pitt Kelton analyst Howard Shapiro. Friedman Billings Ramsey analyst Paul Miller and Gary Gordon, an analyst at Portales Partners LLC in New York, predict $5 billion.”

“‘It’s not going to be a small number,’ said Gordon.”

“‘This is a disaster for the broader mortgage capital markets,’ said Shapiro. ‘To the extent that Fannie Mae and Freddie Mac cannot grow, you are taking even more liquidity out of the markets.’”

“Shares of Freddie Mac plunged almost 30 percent after it said it must set aside $1.2 billion to account for bad loans. The mortgage market shuddered at Freddie’s loss, coming just days after a $1.4 billion quarterly deficit was revealed by Fannie Mae, its bigger government-sponsored rival.”

“Especially troubling to investors is that the remedies Freddie Mac is considering would add to the strain on the housing market, analysts say.”

“They ‘have provided essential liquidity in a time of crisis,’ Shapiro wrote. The loss of their role to ensure the mortgage markets are liquid will result in ‘a further exacerbation of the housing downturn — even less credit available and steeper downturns in home prices.’”

“Despite Freddie’s own bleak assessment of its performance, equity and debt analysts still questioned whether executives were being overly optimistic in forecasting future losses, and investors punished the company’s shares as a result.”

“Ratings agencies also chimed in: Fitch Ratings and Standard & Poor’s Ratings Services both warned that they may cut Freddie’s AA- credit rating on its preferred stock.”

“‘These guys are supposed to be the best credit evaluators in the world. And it looks like they’re getting caught a little off guard along with everyone else,’ says equity analyst Paul Miller of Friedman, Billings, Ramsey.”

“In all, Freddie recorded $4.4 billion and $4.3 billion, respectively, in unrealized losses on its securities and derivatives during the third quarter. Those are losses the company generally considers temporary and do not flow through earnings.”

“Analysts worry that Freddie’s default and loss assumptions might be too optimistic and that those losses may not be temporary.”

“‘The loss severity they talked about was 26% to 30%’ on all loans says Joshua Rosner, managing director of Graham Fisher & Co. ‘While it sounds like a very high number, relative to history, that’s not the peak,’ he adds.”

“Loan loss rates of ‘25% to 30%, given the historically unprecedented bursting of a real estate bubble, is not either conservative nor would it be unrealistic to expect. Given the deterioration in conditions, the severity could be significantly higher than that.’”

The LA Times. “Freddie Mac would play a key role in plans to provide more funding for home loans. One proposal would lift the current $417,000 ceiling on mortgages that Freddie Mac and its sister company Fannie Mae can buy, a move long sought by lenders in states such as California with high home prices.”

“But that idea may be jeopardized by rising losses in the loan portfolios held by Freddie Mac and Fannie Mae, some experts said.”

“‘Their opponents will ask, ‘Why should we give them new powers when they can’t even manage the risks they have?’ said Jaret Seiberg, an analyst at Stanford Group in Washington.”

“Countrywide Financial Corp. survived the first phase of the mortgage meltdown this summer thanks in part to a $2-billion investment from Bank of America.”

“But the Calabasas-based lender suffered a major new setback Tuesday when mortgage giant Freddie Mac posted a big loss and said it needed new capital — which could curb Countrywide’s ability to make loans.”

“‘Countrywide’s survival strategy has depended on access to the secondary markets’ — the companies that, like Fannie Mae and Freddie Mac, buy loans and bundle them into securities for sale, analyst Shapiro wrote. The approach won’t work so well when Freddie Mac and Fannie Mae ‘are capital-constrained and may need to shrink.’”

“As losses mount at Fannie and Freddie, they will have to compensate by raising those fees to lenders, an extra charge that Countrywide may have trouble bearing, said Frederick Cannon, an analyst at Keefe, Bruyette & Woods.”

“‘The question is whether Countrywide can pass the extra costs on to borrowers,’ Cannon said.”

“BofA made a $2-billion investment in Countrywide to gain access to its efficient loan-generation and customer-service operations. The decline in Countrywide’s shares has now left BofA down $858 million at Tuesday’s closing price. BofA declined to comment.”

“The risk of banks defaulting on their debt rose to the highest on record as losses by mortgage finance company Freddie Mac fueled concern that lenders will add to more than $50 billion of writedowns worldwide.”

“‘Everything is signaling that the market may switch to panic mode,’ Philip Gisdakis, a credit analyst at UniCredit SpA in Munich, said in an interview today. ‘The news flow is so bad and there is no relief in sight.’”

From Reuters. “U.S. mortgage applications fell last week, with demand for both refinancing and home purchase falling, an industry group said on Wednesday.”

“‘We have this multifaceted, Jenga tower of hurdles starting from the dust and plywood production stage and running all the way through clearing the mortgages to their final investor,’ Gregory Miller, chief economist at SunTrust Bank, Atlanta, said of the precarious U.S. housing market.”

“Builders can’t move homes. Buyers are ‘left with gnawing fears that they’ll wake up with buyer’s remorse,’ that their home value soon drop in value even from the discount they managed to score. On top of that, ‘the purchaser has to go find a mortgage and standards are higher,’ he said.”

From Marketplace. “The Office of Thrift Supervision reported today that earnings for the nation’s savings and loans plunged 84 percent in the third quarter.”

“JILL BARSHAY: ‘Investors piled into savings and loan stocks in August. Back then they looked like a safe haven from the subprime mess. Scott Polakoff is the chief operating officer at the Office of Thrift Supervision. He says S&L earnings fell 84 percent in the third quarter.’”

“SCOTT POLAKOFF: ‘It’s been a long time since we’ve seen that kind of drop — almost 15 or 16 years ago.’”

“Polakoff says large thrifts who sell mortgages to investors took some of the biggest losses. They had to write down some of the mortgages on their books when they couldn’t sell the loans.”

“Polakoff says thrift execs think the housing market will get worse. They’ve diverted money away from this year’s profits to cover future mortgage defaults. Over the next 12 to 18 months, some consumers may find it a lot harder to get a loan.”

From Barrons. “ACA Capital. a leading insurer of sub-prime mortgage-bond securitizations, is drawing relentlessly closer to ‘bagel-land,’ that dismal place where a stock’s price is zero.”

“The proximate cause of this slide was the disclosure on Nov. 9 that Standard & Poor’s had put ACA on negative Creditwatch and might cut its credit rating from the current single-A.”

“Any rating below single-A-minus would force the insurer to post margin of $1.7 billion or more on its $25 billion book of subprime collateralized mortgage obligations, to reflect the mark-to-market losses that it has already acknowledged on this portfolio.”

“The demise of ACA would embarrass its roster of institutional owners, including Bear Stearns’ Merchant Bank, hedge fund Perry Capital and the Third Avenue mutual-fund concern.”

“ACA has long been a convenient dumping ground in which major subprime securitizers like Bear Stearns, Citigroup, Merrill Lynch and some 25 other prominent dealers could pitch billions of dollars of risky obligations for modest premiums. That let them gussy up their balance sheets and shift any potential mark-to-market hits to ACA.”

“If ACA Capital were to founder, more than $69 billion worth of CDOs, including the $25 billion in subprime paper, would come rumbling back to the Wall Street banks, and likely with heavy attendant losses.”

“Big-name investment banks are taking a financial beating this year, leaving many Americans to ask: Just how did all these Wall Street bankers in their $5,000 John Lobb shoes manage to step in you-know-what?”

“Individual investors frequently lose money by chasing past returns. Investment banks did just that amid the booming housing market. They mirrored each other’s moves as they raced into ever-shakier lending. Some estimates suggest that collectively they’ll lose more than $400 billion.”

“‘They are basically a herd of sheep. They all go into it together,’ said A. Gary Shilling, a financial consultant who warned in 2005 and 2006 of troubles to come. In the 1980s, banks followed each other into massive Latin American debt. Later, he said, they all got burned together by losses in manufactured housing.”

“In hindsight, the risks from an overheated housing market seem obvious. But in a now-famous July interview with London’s Financial Times, then-Citigroup CEO Charles Prince appeared to confirm the sheep metaphor when he shrugged off the imminent danger.”

“‘When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,’ he said.”

“Most Wall Street investment banks made the same fundamental miscalculation made by many average Americans who bought second homes or vacation properties as investments.”

“That mistake was assuming that home prices might flatten but wouldn’t fall. Individuals believed they couldn’t go wrong. Investment banks concluded the same, relying on complicated financial models dating back to the 1930s that showed that home prices defy the laws of gravity.”

“‘They didn’t realize that with rising house prices, things look very good, but they were lending to people that couldn’t afford chicken coops but were in four-bedroom homes,’ said Shilling.”

The Orlando Sentinel reports from Florida. “The financial collapse of one of America’s legendary home builders has left people throughout Central Florida stuck with unfinished houses, liens against their properties, unopened clubhouses and community pools, and warranties that could be worthless. Many of the victims, scattered throughout the Southeastern United States, don’t know whether their houses will ever be finished.”

“‘We’re just kind of in limbo here and waiting to hear,’ said Vincent Santanelli, a resident of Cascades at Groveland who helped his elderly father-in-law with a $20,000 down payment on an unfinished house in the Lake County community. ‘We haven’t even heard a word from Levitt.’”

“A company Web site says Levitt’s future is uncertain, the status of homeowners associations that it previously ran is ‘not yet clear’ and it can no longer honor home warranties.”

“With only 72 employees left out of about 500, Levitt and Sons ‘just does not have the resources to continue to serve as intermediary,’ said Paul Singerman, lead bankruptcy counsel for the builder.”

“At Jesup’s Reserve, the pool and cabana are off-limits because construction is incomplete. A ‘No trespassing’ sign warns residents that the area is a construction site and that entering it without permission is a felony. Resident Maggie Martin fears a closed cabana and pool will be ‘a tremendous drain’ on property values.”

“With almost 70 units of a planned 161 complete, there should be enough money coming in from association dues to keep things running for a while. ‘I think they can limp along’ and raise enough money to pay for maintenance of common areas, said Matt Jordan, a property manager.”

“‘We want to at least maintain the bare minimum,’ Martin said.”

“But the situation is more precarious in Turtle Creek, with only a few homeowners around to pay the bills through their monthly assessments. The budget calls for $18,000 a month to be spent on landscape maintenance.”

The Daily Business Review. “The developers of Downtown Dadeland are walking way from the massive mixed-use project in Kendall and handing over the unfinished complex to construction lender Goldman Sachs Commercial Mortgage.”

“Gulfside Development principals Jackson Ward and Stefan Johansson say they can no longer afford to make payments on the $224 million construction loan and won’t fight a foreclosure suit filed two weeks ago in Miami-Dade Circuit Court.”

“The project’s failure is the largest yet in the current real estate downturn, which has hit the overdeveloped condo market especially hard.”

“‘It is a friendly handover,’ said Johansson, principal of South Miami-based Gulfside Development. ‘We have been helping them in the transition for almost a month. There are no bad feelings, and we wish them good luck with a beautiful project.’”

The News Press. “Cameratta Properties is reassessing how to proceed with its mixed-use residential and commercial project First Street Village in downtown Fort Myers because of the soft housing market.”

“Before moving forward, Cleveland-based Cameratta must decide whether to scale back the residential part of the development because it’s hard to get financing to build homes nowadays, CEO Joe Cameratta said today. Financing for retail and office construction, he said, ‘is much easier to obtain. The economics make more sense.’”

“Ed Bonkowski, a Fort Myers-based commercial real estate broker, said cutting back on the residential is ‘a good idea. They were unrealistically priced in the market when they first opened their doors.’”

“The First Street Village sales center has been relocated to the sales center for High Point Place, Cameratta’s nearby high-rise condominium project.”

“Colin Kelly is an associate with Commercial Realty Group of Bonita Springs, which specializes in leasing, land sales and new construction. Formerly a securities broker for companies such as Smith Barney and Shearson Lehman Hutton, the Naples resident has worked in various areas of the local commercial real estate market since the late 1970s.”

“Kelly believes that the accuracy of the old industry saying that commercial real estate trends tend to lag behind those of the residential side is being borne out by Southwest Florida’s current market conditions.”

“His recipe for reversing the current commercial slump involves an attitude adjustment on the part of everyone involved — property owners, prospective investors and real estate agents. Fence sitters waiting for prices to plummet even further, prospective buyers hamstrung by fear of losses and property owners reluctant to lower prices when vacancy rates are high need to realize that their mindsets are helping to prolong the slump, in Kelly’s opinion.”

“Q: What is Commercial Realty Group doing to address current market conditions?”

“A: We are considering taking the abnormal rise in real estate rates since 2004 and removing it from the equation. We’re considering rolling back our lease-rates and our properties for sale, back to pre-2003, pre-2004 prices. That would eliminate the investor having to say, I’m going to wait until the market goes down. This is what has to happen in commercial real estate because there’s a whole lot of property that’s going to come on line over the next six months to a year. You’re going to see prices continue to spiral down.”

“People need to stop saying this is a hiccup. This isn’t a hiccup. If people are going to play in this market place, they should say, lets play, let’s be on the side of the buyer. I’m putting myself on the side of the buyer. I’m saying (to the investor), if you want to come back into the marketplace, I’ll show you a piece of property that’s priced right. You’re not going to have to chase a piece of property that’s spiraling out of control.”

The St Petersburg Times. “Concerned about the safety of their money, local governments are pulling their cash out of a $20-billion state-run investment pool. Pinellas County joined the exodus Tuesday, yanking out its entire investment, $290-million. Some $6-billion has left the pool in recent weeks, costing it nearly a fourth of its assets.”

“The state pool is another casualty of the meltdown in the housing and mortgage markets. Even though it holds no subprime mortgages, the state pool owns securities backed by other types of mortgages.”

“‘You can’t take a chance,’ said Ron Miller, finance administrator for Pinellas Park. He withdrew $14-million from the state pool Friday and is considering what to do with the remaining $8-million in city funds held by the state. ‘The primary thing we’re doing is securing the money. The return is a secondary goal. … We may pull more in the next day or two.’”

From Florida Today. “Today Brevard County can complete a whirlwind month of major acquisitions by the Environmentally Endangered Lands program. County commissioners will review two deals to buy a combined 1,500 acres for conservation in Scottsmoor for $24.2 million.”

“But Clerk of Court Scott Ellis plans to repeat his concerns about other recent deals. He argues the county is paying peak prices in a down real estate market, and that appraisers have made wrong assumptions about the properties’ development potential.”

“‘We’re paying far more for property then it’s worth,’ he said. ‘Why do we have to rush these purchases through?’”

“Of the two deals, the smaller one offers 669 acres for $9.16 million. The price is in between two appraised values from June 2006 and more than double what the land sold for in 2003.”

“The larger one — 853 acres for $15 million — is roughly $5 million below two appraised values from March of this year. The land last sold for $5.4 million in 2005, according to Ellis’ office.”

The Palm Beach Post. “The real estate slump has prompted Home Depot’s former wholesale arm, HD Supply, to scale back at its new plant in Port St. Lucie.”

“Instead of creating 100 jobs as planned at the 223,000-square-foot lumber and building-materials plant that opened in August at LTC Industrial Park, Atlanta-based HD Supply is sitting tight with 10.”

“‘We believe this staffing is appropriate in light of current market challenges,’ HD Supply spokeswoman Lauren Falcone said in an e-mail. ‘We intend to continue to staff as appropriate for market conditions.’”

“That’s not quite the return on investment the Port St. Lucie City Council was hoping for when it sold the 21-acre parcel to Cox Lumber for the super-discounted price of $100,000 in 2004. HD Supply later acquired Cox Lumber.”

“The city’s original contract with Cox, which HD Supply was bound by, required the firm to create at least 60 jobs within a year of opening and 100 jobs within two years. If it didn’t, it had to pay the city up to $1 million.”

“The council agreed this summer to give HD Supply another four years to hire 60 people and five more years to hit 100.”

The News Journal. “There won’t be many tinsel-and-bow topped gifts under the Christmas tree at the homes of Ray Moore and Ron Paulsen. ‘We’re going cheap this year,’ Moore said of his Christmas list.”

“The blame for that goes to Flagler’s fizzled housing market, Paulsen and Moore say. The men formed a drywall company 35 years ago and have spent every day since building it and their reputation as contractors.”

“Ask them how much longer before they may have to close up shop forever, Paulsen looks to the sky thoughtfully and jokes, ‘Let’s see, have I got enough gas to last another week?’”

“Paulsen and Moore have survived slow housing markets before. It’s part of the ebb and flow of their industry. But this slump takes the award for hardest yet, they said.” “Why? There could be several reasons, they admit.”

“They say maybe it’s that they’re getting older. Maybe they should have saved a little harder when work was plentiful. Maybe it’s because they weren’t prepared to run their business this year without the $60,000 owed to them by multiple builders facing criminal charges.”

“Whether it’s one reason or all of the above, right now they’re just doing what they know to do until it gets better or they can’t do it anymore, Moore said. ‘We’ve never cut a corner,’ Paulsen said, and they won’t be starting now.”

“In housing slowdowns of decades past jobs were few, Moore said. In this one, there are none. They’ve gone from doing as many as two jobs a day working six days a week to working only three jobs in all of September.”

“So at the grocery store it’s generic instead of name brand. It’s health food instead of health insurance. And the little extras here and there are no more. But they can only penny-pinch so much and little good it does if there are no pennies to pinch, Moore said.”

“This year has brought with it a fight for their business and their future, but they’re doing everything they can to keep three decades of effort on the map and in the phone book.”

“‘Christmas? How do you spell that?’ joked Paulsen.”

Please post off-topic ideas, links and Craigslist finds here.