asianinvasian_IHB
New member
columbussquare.com said:
Prices have dropped 30%, from the peak back in 2006 when these things were selling for $570k - $600k.
When is the best time to buy??????????
- Thread starter firsttimehomebuyer_IHB
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Prices have dropped 30%, from the peak back in 2006 when these things were selling for $570k - $600k.
Sorry. Let's get back to the original plot.
This is true, I don't know the financial condition of anyone here. The point I was trying (unsuccessfully) to make was that one reason valuations could be tied directly equal to purchasing power (as believed by the vocal majority of IHB) is because that is what would work best for them. They "believe the lie" as Seth Godin says because it fits within their world view. In some parts of the country the method that you preach is true, just not in most parts of Orange & LA County.
Worth has the ability to change with development, zoning changes, an area becoming "hip", etc. The one thing you can't change is the location. Sometimes that works in your favor and other times it doesn't. Just because an investor is willing to accept a certain rent level doesn't mean that is the most a property is worth. If you don't have anything but the money that you have for rent to "redirect" to a purchase then 95% of the time you'll be priced out of the market.
If we look at values like a bell curve... your theory is to the extreme left. Valuations at the "top of the market" could be to the far right. Occasionally both will happen. But it's in the standard deviation from the middle view (up and down) where most properties are priced.
Thank you for the compliment for my investor. I agree that speculators that overpay and must sell at anytime are foolish. However, if someone "accidently" overpays on the purchase price but they have the ability to maintain responsible ownership even if they're "upside down" eventually they'll come out on top again. Yes, this is not as efficient and profitable but it is consistent with my view that you buy great properties (in whatever price range) and you develop a long-term financial plan that is sustainable you'll do fine. After your initial loan you can't guarantee that you'll be able to refi or resell any time soon so at purchase you need to be wise in your approach.
The only way to "short" is to shift risk. If you see that we're at the top of a market (and financing costs are reasonable) that is the perfect time to cash-out some of the equity. The bank will agree to it because you got an appraisal. If you wait the access to capital will disappear. Even if you don't think the equity is "reasonable" you can game it to your favor. So if the trend is going down, you can "freeze" these assets in a very low-risk investment that will help offset your financing costs but mostly to keep it safe. When prices drop and you now have capital to deploy and buy at a bargain. NOTE: This method, while viable, requires a sophisticated and disciplined approach.
I know that a cap rate will "change" over time. The point I was making is: cap rates tell you where a property is at, based on current rents, when you're buying the property. When you buy you effectively lock in that rate. Yet the market for that asset will go up and down as you own it. If rents don't change a new price that people are willing to pay would not impact your rents but it would change the quoted cap rate. But that assumes that your willing to sell. If you're smart you let the real estate work at producing rents during recessions and periods of rising borrowing costs. The higher cap rate says it's not a time to sell. But if that's true then the exact worst time to sell is also by definition the best time to buy.
I don't know that current prices are justified. What I am saying is that it is possible. Even if they're a little too high the "deal" that you're waiting for might not exist in a few months / years.
By 2006 we stopped buying and I was advising people to access capital while they still could. We were both right about that. Where we differ is in how much the "market correction" should be. It is possible for you to be right about the crash and wrong about the bottom? Based on your method of valuation I believe that time will prove you wrong for OC & LA. Did a house selling for a record price in 2006 make sense to you? No, but only time showed that this was irrational exuberance (or too much too fast). But does a house selling for the equivalent rental rates make sense either? No, not in OC or LA. That's the opposite of irrational exuberance (or projectile vomiting).
Anyone who doesn't recognize that prices go up (and down) in real estate is a fool. You and I are not fools.
There were a lot of fools who had a short timeline and not enough resources to play at the high-stakes tables. They lied to themselves and said they were investors. But true investors leave themselves a lot of outs. In the example mentioned before, appreciation wasn't a factor in the purchasing decision. After it had appreciated faster than we thought possible it was sold. It was put on the market as almost a joke (i.e. $100,000 more than he thought he could get) and when a viable offer came in he jumped. That was near the top of the apartment market in recent years. For him to say, I'm looking to buy again it tells me that I'm not alone. Maybe others here silently agree too.
Baloney.
You are seriously claiming that only for one year in the last 20 years has the market been at rental equivalent rates. That's 1988 to present. Two massive bull markets and it isn't even true.
Agreed,
You have an interesting perspective on the market. Based on the volatility in our market based on what I believe is irrational exuberance, your point of view has been right more than it has been wrong. Basically, you are saying that prices can become permanently detached from their fundamentals, or they remain detached from them for such long periods that the fundamentals have no meaning. This is certainly true of stocks. The last time stocks traded at cashflow value was 1974. Similarly, the last time houses traded at rental parity was from 1996-1999. What happens over the next decade will be very revealing. Just as stocks never did come back after the late 90s bubble, I believe houses will not come back for at least a decade and probably much longer. In the bubble of the late 70s and the bubble of the late 80s, everyone who overpaid was bailed out in time. This bubble was so much larger, and the fall has been so much greater, this will be the time when market participants learn that real estate does not work the way they thought it did.
In this conversation I have talked a lot about irrational exuberance. If you have not read the book, you really should read it. When I was doing my research for my book, I read all of Robert Shiller's academic papers and Irrational Exuberance. He goes in to great detail describing the mindset and beliefs of irrational exuberance. I keep characterizing your point of view that way because the things you write are practically verbatim out of his writings on the subject. It is obvious you do not see it that way, which is why I suggest you read his writings. He may not sway your opinions, but it may get you to reexamine your perspective on the markets.
It is clear that the volatility in prices in California are not driven by fundamentals. Fundamentals do not change as rapidly as prices do here. There is no variable that correlates with pricing which is part of the evidence for irrationality. When prices crash, they always fall down to levels consistent with historic norms for price-to-income, price-to-rent, debt-to-income, and other ratios closely approximating rental parity. This is strong evidence of a fundamental valuation underpinning the market. If there were no reliable variables consistent at market bottoms, the entire market pricing system would just be speculative noise. Since there is a fundamental valuation to which the market periodically returns, people who pay in excess of this valuation are likely to get burned.
Thank you for the recommendation. I enjoy good logic and writing. It helps shape my views. I've placed an order for that book as well as another one of his books titled, "The Subprime Solution". Have you read that one? The title alone made me curious since finance and housing are married to each other.
and that makes AMT simple ? you have to do the entire return to tell them about the AMT...
huuh ?? what math are you using ?
camden R2 $558k down to $443k that's 21%
camden R3 $558k down to $500k that's 11%
I too believe that prices are based on fundamentals we just make different conclusions on current pricing. The problem that I have with basing prices entirely on "price-to-income, price-to-rent, debt-to-income, and other ratios closely approximating rental parity" is that it values the asset as a "current asset" not a "long-term" one. This is like saying the house will disappear as soon as you stop living there.
When valuing a publicly traded company you look at the fundamentals like price-to-earnings, current ratio, earnings per share, return on assets, etc. But the reason that stocks haven't traded at these levels since 1974 is that the "potential" is "priced into the market". When a stock it trading at earnings it's often a red flag that something is seriously wrong with the business and/or industry. It's really in trouble when the book value of their assets is greater than their stock price. Then they're subject to a hostile take-over and broken up for the parts (see the movie Wall-Street).
I've walked into a number of homes that are REOs. 90% of the ones that I saw had tens of thousands of dollars in damage and deferred maintenance including one house that had all fixtures removed including the water heater. Yet this house was impacting the "comparable sales" and even though it wasn't "comparable" it helps to prove your point that we're moving closer to approximating rental parity.
I believe that we should know what the overall market is doing but make decisions for buying and selling based on the specifics of individual properties and the financing available (we will see more seller carry-backs soon). The closer to rental parity the lower the risk for the purchase or investment.
Everyone should look at the ratios (including cap rate) and compare properties on how expensive they are based on the fundamentals. But don't just use purchase price, you also need to add to the mix additional expenses for one property that another doesn't have (i.e. HOA dues), you also need to look at financing costs (and not just the rate, the points, fees, etc) - when in doubt ask for a Good Faith Estimate or see if a mortgage broker will tell you the spread between interest rates as described in discount points or YSP (yield spread premium). Judge every property that you're considering academically and determine which ones are "cheaper" and which ones are "more expensive" not based on price but as compared to fundamentals. (i.e. a $700k house may actually be "cheaper" than a $400k house based on this analysis but it does require more resources to purchase). You can also do this same exercise with one property over time and you'll see how it changes.
Big purchases are often emotional ones but if you balance that out with "the numbers" you'll find out if you're getting a good deal or not. My view is that the fundamentals with no multiplier is the lowest price range available unless the property is damaged or in disrepair. Accounting for the potential uses or alternative use (i.e. personal residence, rental, etc) and variance in business models (i.e. seeking rezoning or having it already zoned for another more valuable use, redevelopment of a property in a great location - these are often called "tear-downs", a remodel, an addition, marketing it as a rental to different target markets - they don't all pay the same, etc) the price will most of the time be higher than the rental parity (and rightly so).
R1 & R3 have more demand because they have less of them. R2 was my basis and I used $575k down to $413k (effective cost w/ financing discount). This equals 28.2%
If we used your high then it would be up to 26% down from the peak.
????
the only way to compare prices is by looking at list prices "back then" to now...
when you start including other factors everything is up to interpretation.... financing discounts, incentives etc... who knows what was available and what's available now and the real prices paid... ?
Supply is independent of demand. Both are related to price, but not each other.
$558k was NOT the peak.
Hi IR, I am a little new to real estate business and it's been a long time since I took an econ class. Can you please clarify your statement a little? It seems to be if both supply and demand are related to price, wouldn't there be a dependence? Thanks.
Example 1: explanation of each curve
Supply curve shows us the answer to the question, "Who will make/produce/deliver/supply a product if you are paid price X to do so?"
Demand curve shows us the answer to the question, "Who will buy/consume/demand a product if it costs price X to purchase?"
Example 2: application of each curve
In a market research room at bkshopper's top-secret laboratory, a sign on the door reads "Demand." Inside, buyers are seated and asked if they would buy frozen yogurt if it costs $1, and professor bk counts how many people raise their hands. He then repeats the question for $1.50, again counting hands for buyers. The question is repeated and answers charted through all of the considered pricing points for cantaloop, who pays handsomely for the info.
In a much smaller room across the hall (the supply closet
), all of the purveyors of frozen yogurt are invited by bk to answer similar questions. Would they make and sell a serving of their product for $1? What about $1.50, $2, etc... Numbers are tallied for each price point, and again cantaloop pays for the valuable data.
Cantaloop corners the market by pinpointing where he will maximize profits (remembering that most people responding to surveys are just in it for the free snack, or the mypoints, and will be less than 100% truthful).
Example 3: disproving causitive supply relation to demand
Farmer no_vas is pontificating in his organic hemp field one day and realizes that he might have been overlooking an extra income stream - selling excess raw cow dung to his friends in the VoC. He makes 1000 calls to invite purchases of his top-grade patties for what he believes to be a great price of 3-for-a-buck. Much to his chagrin, there are no takers since nobody can eat their home-grown fruits and veggies there. He applies his "standing room only" sales pitch when he calls back and lets them know that, "There are only 6 cow pies left... don't miss out!" but still nobody is biting. As a last ditch effort, he cuts the price and offers all 6 for $1. Door-to-door he goes, but all have the same answer - not interested. At the last home, graphrix answers the door and offers to help, "If you pay me $20, I'll take that off of your hands so you don't have to carry it home." to which no_vas eventually agrees.
Takeaway #1: by limiting supply, demand is not driven up.
Takeaway #2: as always, the true nutter ends up full of $#!+
Prices have dropped 30%, from the peak back in 2006 when these things were selling for $570k - $600k.
columbussquare.com_IHB
New member
IrvineRenter said:
Sorry. Let's get back to the original plot.
IrvineRenter said:
This is true, I don't know the financial condition of anyone here. The point I was trying (unsuccessfully) to make was that one reason valuations could be tied directly equal to purchasing power (as believed by the vocal majority of IHB) is because that is what would work best for them. They "believe the lie" as Seth Godin says because it fits within their world view. In some parts of the country the method that you preach is true, just not in most parts of Orange & LA County.
IrvineRenter said:
Worth has the ability to change with development, zoning changes, an area becoming "hip", etc. The one thing you can't change is the location. Sometimes that works in your favor and other times it doesn't. Just because an investor is willing to accept a certain rent level doesn't mean that is the most a property is worth. If you don't have anything but the money that you have for rent to "redirect" to a purchase then 95% of the time you'll be priced out of the market.
If we look at values like a bell curve... your theory is to the extreme left. Valuations at the "top of the market" could be to the far right. Occasionally both will happen. But it's in the standard deviation from the middle view (up and down) where most properties are priced.
IrvineRenter said:
Thank you for the compliment for my investor. I agree that speculators that overpay and must sell at anytime are foolish. However, if someone "accidently" overpays on the purchase price but they have the ability to maintain responsible ownership even if they're "upside down" eventually they'll come out on top again. Yes, this is not as efficient and profitable but it is consistent with my view that you buy great properties (in whatever price range) and you develop a long-term financial plan that is sustainable you'll do fine. After your initial loan you can't guarantee that you'll be able to refi or resell any time soon so at purchase you need to be wise in your approach.
IrvineRenter said:
The only way to "short" is to shift risk. If you see that we're at the top of a market (and financing costs are reasonable) that is the perfect time to cash-out some of the equity. The bank will agree to it because you got an appraisal. If you wait the access to capital will disappear. Even if you don't think the equity is "reasonable" you can game it to your favor. So if the trend is going down, you can "freeze" these assets in a very low-risk investment that will help offset your financing costs but mostly to keep it safe. When prices drop and you now have capital to deploy and buy at a bargain. NOTE: This method, while viable, requires a sophisticated and disciplined approach.
IrvineRenter said:
I know that a cap rate will "change" over time. The point I was making is: cap rates tell you where a property is at, based on current rents, when you're buying the property. When you buy you effectively lock in that rate. Yet the market for that asset will go up and down as you own it. If rents don't change a new price that people are willing to pay would not impact your rents but it would change the quoted cap rate. But that assumes that your willing to sell. If you're smart you let the real estate work at producing rents during recessions and periods of rising borrowing costs. The higher cap rate says it's not a time to sell. But if that's true then the exact worst time to sell is also by definition the best time to buy.
IrvineRenter said:
I don't know that current prices are justified. What I am saying is that it is possible. Even if they're a little too high the "deal" that you're waiting for might not exist in a few months / years.
By 2006 we stopped buying and I was advising people to access capital while they still could. We were both right about that. Where we differ is in how much the "market correction" should be. It is possible for you to be right about the crash and wrong about the bottom? Based on your method of valuation I believe that time will prove you wrong for OC & LA. Did a house selling for a record price in 2006 make sense to you? No, but only time showed that this was irrational exuberance (or too much too fast). But does a house selling for the equivalent rental rates make sense either? No, not in OC or LA. That's the opposite of irrational exuberance (or projectile vomiting).
Anyone who doesn't recognize that prices go up (and down) in real estate is a fool. You and I are not fools.
There were a lot of fools who had a short timeline and not enough resources to play at the high-stakes tables. They lied to themselves and said they were investors. But true investors leave themselves a lot of outs. In the example mentioned before, appreciation wasn't a factor in the purchasing decision. After it had appreciated faster than we thought possible it was sold. It was put on the market as almost a joke (i.e. $100,000 more than he thought he could get) and when a viable offer came in he jumped. That was near the top of the apartment market in recent years. For him to say, I'm looking to buy again it tells me that I'm not alone. Maybe others here silently agree too.
rickhunter_IHB
New member
Columbus - Although I think you're a professional hired to sway buyers, I really appreciate your thought and writing.
You have a response for everything and you're able to sway it towards your point. I do not know about your thinking
versus IR but your writing skills are very very good. I hope you and IR keep this up because I'm learning a lot from it.
I agree with you on these points...
- We were right about the crash, but differ on where the bottom (Some of us arent worried about the bottom cause we can afford it now).
- I dont think house buying should be equivalent to rental rates also, in OC (I'm buying to live in it, I'm not a real estate investor, My job is my income).
- I recognize prices go up and down and I'm still a fool, because I'm human.
You have a response for everything and you're able to sway it towards your point. I do not know about your thinking
versus IR but your writing skills are very very good. I hope you and IR keep this up because I'm learning a lot from it.
I agree with you on these points...
- We were right about the crash, but differ on where the bottom (Some of us arent worried about the bottom cause we can afford it now).
- I dont think house buying should be equivalent to rental rates also, in OC (I'm buying to live in it, I'm not a real estate investor, My job is my income).
- I recognize prices go up and down and I'm still a fool, because I'm human.
No_Such_Reality_IHB
New member
columbussquare.com said:
Baloney.
You are seriously claiming that only for one year in the last 20 years has the market been at rental equivalent rates. That's 1988 to present. Two massive bull markets and it isn't even true.
no_vaseline_IHB
New member
No_Such_Reality said:
Agreed,
IrvineRenter_IHB
New member
columbussquare.com said:
You have an interesting perspective on the market. Based on the volatility in our market based on what I believe is irrational exuberance, your point of view has been right more than it has been wrong. Basically, you are saying that prices can become permanently detached from their fundamentals, or they remain detached from them for such long periods that the fundamentals have no meaning. This is certainly true of stocks. The last time stocks traded at cashflow value was 1974. Similarly, the last time houses traded at rental parity was from 1996-1999. What happens over the next decade will be very revealing. Just as stocks never did come back after the late 90s bubble, I believe houses will not come back for at least a decade and probably much longer. In the bubble of the late 70s and the bubble of the late 80s, everyone who overpaid was bailed out in time. This bubble was so much larger, and the fall has been so much greater, this will be the time when market participants learn that real estate does not work the way they thought it did.
In this conversation I have talked a lot about irrational exuberance. If you have not read the book, you really should read it. When I was doing my research for my book, I read all of Robert Shiller's academic papers and Irrational Exuberance. He goes in to great detail describing the mindset and beliefs of irrational exuberance. I keep characterizing your point of view that way because the things you write are practically verbatim out of his writings on the subject. It is obvious you do not see it that way, which is why I suggest you read his writings. He may not sway your opinions, but it may get you to reexamine your perspective on the markets.
It is clear that the volatility in prices in California are not driven by fundamentals. Fundamentals do not change as rapidly as prices do here. There is no variable that correlates with pricing which is part of the evidence for irrationality. When prices crash, they always fall down to levels consistent with historic norms for price-to-income, price-to-rent, debt-to-income, and other ratios closely approximating rental parity. This is strong evidence of a fundamental valuation underpinning the market. If there were no reliable variables consistent at market bottoms, the entire market pricing system would just be speculative noise. Since there is a fundamental valuation to which the market periodically returns, people who pay in excess of this valuation are likely to get burned.
columbussquare.com_IHB
New member
When was the time before that? And how far are we from that now? (Note: If you plan to use a percentage use it based on drop from peak value please.)IrvineRenter said:
columbussquare.com_IHB
New member
IrvineRenter said:
Thank you for the recommendation. I enjoy good logic and writing. It helps shape my views. I've placed an order for that book as well as another one of his books titled, "The Subprime Solution". Have you read that one? The title alone made me curious since finance and housing are married to each other.
flmgrip_IHB
New member
awgee said:
and that makes AMT simple ? you have to do the entire return to tell them about the AMT...
flmgrip_IHB
New member
asianinvasian said:
huuh ?? what math are you using ?
camden R2 $558k down to $443k that's 21%
camden R3 $558k down to $500k that's 11%
columbussquare.com_IHB
New member
IrvineRenter said:
I too believe that prices are based on fundamentals we just make different conclusions on current pricing. The problem that I have with basing prices entirely on "price-to-income, price-to-rent, debt-to-income, and other ratios closely approximating rental parity" is that it values the asset as a "current asset" not a "long-term" one. This is like saying the house will disappear as soon as you stop living there.
When valuing a publicly traded company you look at the fundamentals like price-to-earnings, current ratio, earnings per share, return on assets, etc. But the reason that stocks haven't traded at these levels since 1974 is that the "potential" is "priced into the market". When a stock it trading at earnings it's often a red flag that something is seriously wrong with the business and/or industry. It's really in trouble when the book value of their assets is greater than their stock price. Then they're subject to a hostile take-over and broken up for the parts (see the movie Wall-Street).
I've walked into a number of homes that are REOs. 90% of the ones that I saw had tens of thousands of dollars in damage and deferred maintenance including one house that had all fixtures removed including the water heater. Yet this house was impacting the "comparable sales" and even though it wasn't "comparable" it helps to prove your point that we're moving closer to approximating rental parity.
I believe that we should know what the overall market is doing but make decisions for buying and selling based on the specifics of individual properties and the financing available (we will see more seller carry-backs soon). The closer to rental parity the lower the risk for the purchase or investment.
Everyone should look at the ratios (including cap rate) and compare properties on how expensive they are based on the fundamentals. But don't just use purchase price, you also need to add to the mix additional expenses for one property that another doesn't have (i.e. HOA dues), you also need to look at financing costs (and not just the rate, the points, fees, etc) - when in doubt ask for a Good Faith Estimate or see if a mortgage broker will tell you the spread between interest rates as described in discount points or YSP (yield spread premium). Judge every property that you're considering academically and determine which ones are "cheaper" and which ones are "more expensive" not based on price but as compared to fundamentals. (i.e. a $700k house may actually be "cheaper" than a $400k house based on this analysis but it does require more resources to purchase). You can also do this same exercise with one property over time and you'll see how it changes.
Big purchases are often emotional ones but if you balance that out with "the numbers" you'll find out if you're getting a good deal or not. My view is that the fundamentals with no multiplier is the lowest price range available unless the property is damaged or in disrepair. Accounting for the potential uses or alternative use (i.e. personal residence, rental, etc) and variance in business models (i.e. seeking rezoning or having it already zoned for another more valuable use, redevelopment of a property in a great location - these are often called "tear-downs", a remodel, an addition, marketing it as a rental to different target markets - they don't all pay the same, etc) the price will most of the time be higher than the rental parity (and rightly so).
columbussquare.com_IHB
New member
flmgrip said:
R1 & R3 have more demand because they have less of them. R2 was my basis and I used $575k down to $413k (effective cost w/ financing discount). This equals 28.2%
If we used your high then it would be up to 26% down from the peak.
flmgrip_IHB
New member
columbussquare.com said:
????
the only way to compare prices is by looking at list prices "back then" to now...
when you start including other factors everything is up to interpretation.... financing discounts, incentives etc... who knows what was available and what's available now and the real prices paid... ?
IrvineRealtor_IHB
New member
columbussquare.com said:
Supply is independent of demand. Both are related to price, but not each other.
asianinvasian_IHB
New member
flmgrip said:
$558k was NOT the peak.
20percentdown_IHB
New member
IrvineRealtor said:
Hi IR, I am a little new to real estate business and it's been a long time since I took an econ class. Can you please clarify your statement a little? It seems to be if both supply and demand are related to price, wouldn't there be a dependence? Thanks.
no_vaseline_IHB
New member
Supply is independent of demand.
Price is the relationship between supply and demand.
If you have supply but little demand, prices go down.
If you have demand but little supply, prices will go up.
If you have demand but you are unable to finance the purchase...............nevermind.
Price is the relationship between supply and demand.
If you have supply but little demand, prices go down.
If you have demand but little supply, prices will go up.
If you have demand but you are unable to finance the purchase...............nevermind.
IrvineRealtor_IHB
New member
20percentdown said:
Example 1: explanation of each curve
Supply curve shows us the answer to the question, "Who will make/produce/deliver/supply a product if you are paid price X to do so?"
Demand curve shows us the answer to the question, "Who will buy/consume/demand a product if it costs price X to purchase?"
Example 2: application of each curve
In a market research room at bkshopper's top-secret laboratory, a sign on the door reads "Demand." Inside, buyers are seated and asked if they would buy frozen yogurt if it costs $1, and professor bk counts how many people raise their hands. He then repeats the question for $1.50, again counting hands for buyers. The question is repeated and answers charted through all of the considered pricing points for cantaloop, who pays handsomely for the info.
In a much smaller room across the hall (the supply closet
), all of the purveyors of frozen yogurt are invited by bk to answer similar questions. Would they make and sell a serving of their product for $1? What about $1.50, $2, etc... Numbers are tallied for each price point, and again cantaloop pays for the valuable data.Cantaloop corners the market by pinpointing where he will maximize profits (remembering that most people responding to surveys are just in it for the free snack, or the mypoints, and will be less than 100% truthful).
Example 3: disproving causitive supply relation to demand
Farmer no_vas is pontificating in his organic hemp field one day and realizes that he might have been overlooking an extra income stream - selling excess raw cow dung to his friends in the VoC. He makes 1000 calls to invite purchases of his top-grade patties for what he believes to be a great price of 3-for-a-buck. Much to his chagrin, there are no takers since nobody can eat their home-grown fruits and veggies there. He applies his "standing room only" sales pitch when he calls back and lets them know that, "There are only 6 cow pies left... don't miss out!" but still nobody is biting. As a last ditch effort, he cuts the price and offers all 6 for $1. Door-to-door he goes, but all have the same answer - not interested. At the last home, graphrix answers the door and offers to help, "If you pay me $20, I'll take that off of your hands so you don't have to carry it home." to which no_vas eventually agrees.
Takeaway #1: by limiting supply, demand is not driven up.
Takeaway #2: as always, the true nutter ends up full of $#!+