D.C. builders have begun selling houses like Wal-Mart sells soap.

The Washington Post tells us that Mid-Atlantic Builders in Rockville are offering buyers the "Lowest Price Guarantee." He'll adjust the sales contract downward if the price falls between the time the customer signs an agreement and 45 days before the settlement.

Doesn't sound like much protection to us...but we didn't read the fine print.

"We've given up trying to sell that house we bought in Delray Beach," said a source on Friday. "Of course, we could sell it if we wanted...but it would mean giving it a steep discount. There are about ten houses for sale on the same street."

It took years to build up the housing bubble in places like South Florida. It will take years to let the air out. Houses aren't marked to market immediately, like stocks or copper. It takes time for buyers and sellers to adjust to new market conditions. At first, the buyers hesitate. Then, the sellers dither. Then, when weakness becomes more obvious, a few buyers come forward...hoping for a bargain in what they believe is a market still on its way up.

The government and the realtors seem to believe it is, too. New numbers purport to show that house prices are still rising. In July, house sales fell 21%...but not according to the Commerce Department, which claims that sale prices actually rose 0.3%. The NAR, meanwhile, said they went up almost a full percentage point.

What gives?

Well, the figures probably don't take into account the incentives sellers are now offering. And they surely don't take into account the huge number of houses that are simply not selling because owners are unwilling to take the loss. Why? Because they are still not convinced the slump will be deep or long lasting. This delays the impending bubble burst...and keeps the press reporting only the part of the reality everyone wants to see - the part that says that, as of July, those who were able and willing to sell were apparently still seeing slight gains.

Meanwhile, this chart tells another story - about homeowners' collapsing equity. As long as the current trend continues, owners will own less of their own homes every month. They will be less willing to sell at a loss...but many will be more desperate to do so.

The "home ATM is not refilling as rapidly as it has in recent years," says Paul Kasriel of Northern Trust. For the last few years, U.S. consumers just walked across the living room to the invisible ATM machine in the corner and 'took out' some of their growing home equity. Now that equity is no longer growing at the rate it was - if at all - the ATM machine doesn't work as well as it used to. Many are still 'taking out' equity...but now it's coming out of what they have left after house prices go down, not what they are gaining from a rising market.

Mortgage equity withdrawal (MEW) has faltered, to an annualized rate of $214.2 billion in the third quarter of this year after peaking at $730.5 billion a year earlier. Of course, this means that consumers have less money to spend. And less consumer spending should begin to pinch sales...and profits.

Not that Wall Street even blinked. Last week, the Dow hit new records. Of course, it's still down in real terms...investors might as well have put their money in a sock over the last seven years. You'd think they'd get tired of it. You'd think they'd notice what is happening to the consumer. You'd think they'd wake up one of these days in a panic. But so far, no one has.

Which is why we continue our Crash Alert.

When everybody is thinking the same thing, nobody is thinking. The VIX, which measures investors' fears of a crash, is near record lows...while stock indices, property, art, commodities, and just about everything else are at record highs.

Nothing may crash ever again. Never. Nothing but blue skies and soft landings from now on. Yes, dear reader, we could all live happily ever after, forever and ever, Amen.

But when you are passing through an airport and you find crash insurance offered at record low prices...why not buy some? Who knows, maybe your spouse will get lucky.