Too many house flippers hurt a market, every single time.

The Deseret News in Utah. “In a sign that Utah’s housing frenzy also might be at a turning point, housing prices in the St. George metropolitan area have started to soften.”

“‘Absolutely, the market has turned down here,’ said Allan Carter, director of developer services for Southern Utah Title Co. ‘There are whole subdivisions filled with spec homes that in one case don’t have a single home sold.’”

“Carter blames southern Utah’s wild housing ride on real estate investors, who bought up hundreds of properties with the intention of flipping them. Last summer, roughly 40 percent of people purchasing properties in the St. George market were investors, Carter said.”

“And Carter believes the Salt Lake region is prone to what he calls a ‘train wreck’ now hitting Las Vegas and Phoenix. His advice to people looking to buy a home in the Salt Lake region is to wait until next fall. ‘You guys are going to hit the wall between April and June next year,’ Carter said. ‘It’s a huge problem.’”

“‘Florida, California and Arizona, are under stress right now, with prices coming down a little bit,’said Jeff Thredgold, an economic consultant to Zions Bank. ‘The market is prone to excess, and they got a little carried away. In our market, we lagged behind for so long..we’ve talked for some time about the fact that Utah real estate would do well for 2006, 2007 and 2008.’”

“Carter said what Thredgold and other economists are missing is the effect of the investor presence in the market. ‘It’s the same element that Vegas missed,’ Carter said. ‘He’s assuming that when a home sells it’s being bought by somebody that holds a job and will live in the home. But the people that bought the homes, bought them with the idea of putting them back on the market. So now in Vegas you’ve got 10,000 homes that have never been lived in.’”

“Clark Ivory, CEO of Ivory Homes, the state’s largest homebuilder, agrees that investors in the Salt Lake region are creating what he calls artificial demand. ‘In many cases when the investors came in the builders couldn’t supply the inventory fast enough, so the prices escalated even more rapidly, which brings in even more speculators and investors,’ Ivory said.”

“‘Builders don’t realize that many of those people that were buying their homes had no intention of occupying them. The builders are ramping up production to meet a new demand, which is an artificial demand. The whole thing is artificially inflated, and then all of a sudden there is this surge of supply,’ he said.”