No. 2 lagging market: Allentown, Pa.
Billy Joel once sang about Allentown's hard times, and the 821,000-person metro area's problems certainly extend to its housing market.
Blomquist says one of the most telling signs of trouble is the fact that institutional investors account for just 4% of Allentown's home sales, or less than half of the 9% rate nationwide.He sees that as an indication that the large private-equity funds that are pouring big bucks into the U.S. housing market these days are skipping the community even though it's just 90 miles west of Wall Street. "Allentown just isn't a place where these Wall Street-backed investors are looking or think is a good market to invest in," Blomquist says. The community has also seen a below-average 41% drop in foreclosure filings, while median home prices have rebounded just 9% after bottoming out this past March. That's less than half of the typical recovery seen nationwide.