For three generations of women fending off the cold outside their uninhabitable brick home, the past seems brighter than the future.

Kim McDaniel, 39, says the holiday spirit has passed her by this year. "I just can't get with it this year," she said.

Her daughter Courtni Williams, 14, agrees. Some of her friends, who also lost homes, are taking medication for depression.

Hurricane Katrina flooded their home August 29 with seven feet (2.1 meters) of water - and toxic black oil from a neighboring refinery.

Like tens of thousands of others displaced by the storm, the McDaniel women are living in cramped quarters with family and friends this Christmas.

Revised downward this week to a Category 3 storm, Katrina destroyed or badly damaged 130,000 of the 200,000 homes in New Orleans, according to the Army Corps of Engineers.

The metro area is in the midst of a housing crisis, officials say. Supply is scarce; demand is high.

Rents have shot up an average of 15 to 25 percent, according to local real estate expert Wade Ragas. Area apartment complexes have waiting lists for hundreds of families. Tent cities flourish. Families are "doubling up." Some homeowners have slept in their garages, Ragas said.

Seventy-five percent of all city police and firefighters are homeless and live with their families on cruise ships or in hotels.

Mayor Ray Nagin says electricity and gas services are 75 percent restored since the hurricane. But like thousands of residents, Sharon McDaniel can attest that even available utilities cannot be easily accessed.

Four months after most of the city flooded, McDaniel's two-story house with pink storm shutters still has no electricity. And there is no power for the trailer that the Federal Emergency Management Agency put in her yard several weeks ago.

Because her home flooded, she says, the utility company will not turn on her electricity until she gets an inspection by an electrician and a permit from the city.

City Hall, crippled by 3,000 recent storm-related layoffs, is overwhelmed by requests for such permits. Officials this week issued a public plea for patience.

Even if FEMA somehow achieves its unlikely goal of providing 25,000 free mobile homes to the area by this New Year's Eve, Ragas said, the housing crisis would not abate.

"It would help it, but it wouldn't solve it," Ragas said.

Money is tight. Katrina wiped out one-third of the state's economy.

Metro area unemployment soared to 17.5 percent in November, from 4.5 percent at the same time last year.

While people search for homes and work, rescue workers in New Orleans and St. Bernard parishes continue to look for bodies of storm victims.

As of December 21, they had found a total of 1,096.

"No one died on our block," Kim McDaniel said. However, a well-known school librarian and her companion perished in the flooding of her Chalmette neighborhood.

Memories of Christmas past help to warm their spirits.

"Last year, it snowed," Courtni said. "It was our first white Christmas."

Her grandmother, Sharon McDaniel, recalls she made a Christmas dinner of hot pork loin, gumbo, baked macaroni and a chocolate praline cake.

They laugh, remembering how Kim McDaniel managed to salvage the artificial "singing" Christmas tree from the attic, after the storm.

Courtni says she is looking forward to a Christmas visit from other displaced friends, who are coming in from Arkansas. They will all stay together with her grandmother's elderly neighbor, Grace Wright, who joins the shivering McDaniel women.

"It's going to be cold in their room," Wright said. "But they have lots of blankets."

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