Where's the Sonic Boom?

Earlier this month, on April 10th, the Artemis II crew came screaming back through the atmosphere to a splashdown off the coast of San Diego. If you were standing on the beach that day, you would have seen the Orion capsule streak across the sky in total silence. It was only seconds later that the sonic boom - that massive, bone-shaking shockwave - finally caught up and hit the ground.

In the Phoenix real estate market, most people are currently staring at the "plane." They see the data points passing by and assume the air is still.

But the physics of our economy is something I can’t seem to ignore; the pressure wave may be around the corner.

According to the latest data, the market currently looks remarkably stable - almost quiet. We are in a "Low-Velocity Equilibrium" where supply and demand have essentially cancelled each other out:

To the average observer, this "Stall" is a sign of a market finding its footing.

Buyers are practicing "patience," waiting for rates to heading towards 6% again.

They see the plane flying by and think the atmosphere is clear.

In the newsletter above I published in March, I discussed briefly many of the factors that are and WILL be playing a role in our economy for the foreseeable future and I still feel this is the case.

I don’t want my clients getting caught downstream….(never thought I’d be typing that sentence in a newsletter - but here we are).

While everyone is watching the 6.3% mortgage rate, I can’t keep my eyes off the Strait of Hormuz.

Right now, that waterway is no longer a free international route; it’s a global toll booth.

With Iran imposing "security fees" (reportedly up to $2 million per vessel) and war-risk premiums for tankers skyrocketing, we are witnessing a structural logistics tax on the entire supply chain moving through this region.

The "Boom" is the Lag:

Right now, the "plane" is flying overhead and the air feels still. At 6.3%, you are currently sitting 59 basis points below the 3.5-year median rate of 6.89%.

While it’s tempting to wait for the data to "cool" further, the physics of the Strait of Hormuz suggests that the atmospheric pressure is actually building.

If you wait for the "perfect" rate, you are gambling against a global logistics tax that is currently on a 60-90 day collision course with the CPI report.

I would recommend focusing on “physics”. If a home fits your lifestyle and the payment beats the historical median, securing that "quiet" 6.3% today is a strategic win before this potential boom of cost-push inflation arrives.

The current "Stall" in inventory is your greatest competitive advantage. With supply up only 0.2% as of mid-April, you are operating in a market with virtually no new competition. This is the "eye of the storm".

The moment where prices are stable because everyone else is holding their breath.

However, once the shockwave of the "Toll Booth Tax" hits the broader economy, consumer confidence often takes the first hit.

If inflation ticks back up and the Fed maintains a "Higher for Longer" stance, the pool of qualified buyers could shrink as their purchasing power is squeezed by higher costs as the the downstream effects begin to show face.

Price ahead of this pressure to sell. The number may be less than you expected upfront - but staying on market longer than needed will create more risk than reward in this environment.