In Phoenix, it might reach 110 degrees in the summer, but it's a dry heat with no humidity, which makes life more bearable, locals say. That's why people deal with the scorching sun and flock to the region for its relatively cheap real estate and plentiful job opportunities.

However, in the last year, while job growth remained strong, housing prices skyrocketed nearly 50%. To buy a new home in Phoenix today typically requires getting on a waiting list or in a lottery system. Those lucky enough to find a place and put down a deposit must wait eight to 12 months for the home to be built. A year ago, a typical starter home in the area cost about $150,000. Now it's more than $220,000.

While demand still remains strong in the market, prices are expected to inevitably cool down, since affordability is becoming an issue for locals. As well, investors and speculators -- those looking to make a quick buck by flipping properties -- have been driven away by anti-speculator clauses inserted by builders in new home contracts. Such investors, as was the case with many other areas of the country, were responsible for much of the run-up in prices.

But the problem is the investors in Phoenix didn't go anywhere. They still own homes that they'll eventually need to sell to realize their profits. The worry now is whether there will be a rush to the exit, with flippers overwhelming the resale market with inventory.

The number of resale listings in Phoenix jumped to 15,820 in August, up 74% from April, according to Ultimate Information Systems, a firm that provides new construction data for the realtor community in Phoenix. The firm projects listings for homes that have already been owned will jump 20% from August to September.

It's an area "that is a big question mark," says Bob Yarrow, a manager with Ultimate Information Systems. "Over the six to nine months, the market will have to deal with it. How orderly will investors exit the market?"

A resale rush would clearly affect demand and pricing for the new properties being built by companies like D.R. Horton ( DHI) and Pulte Homes ( PHM), the two largest builders in the market in terms of number of closings.

Stephen East, an analyst with Susquehanna Financial Group, recently spent three days touring Phoenix, the largest single-family housing market in the U.S., based on permits issued for new construction. The market is crucial, he points out, since several of the public builders generate more than 10% of their total volumes there. Of all the builders, Meritage Homes ( MTH) derives the largest portion of its closings -- about 20% -- from Phoenix, with Standard Pacific ( SPF) not too far behind at 18%, Susquehanna research shows.

Speculators are now putting their homes on the resale market in some communities that the builders have not even closed out yet, East says. The question now becomes: how fast are investors looking to exit?

If the timeline is tight, "then there's no doubt about it that the industry is going to hurt quite a bit," East says, while acknowledging that it is an issue playing out nationally.

If price appreciation in Phoenix starts averaging anywhere from -5% to +5%, then investors will exit significantly faster, East says. At that point, there's a domino effect. As more resale homes come on the market, that cannibalizes demand for new homes and wait lists shrink or disappear.

Phoenix has never dealt with a housing boom like this before, so how the market lands remains a question mark. For homebuyers, a cooling in prices is a good thing. But for builders, there will be ramifications as pressure is put on order numbers in the market over the next six months.

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