No. 1 worst market: McAllen, Texas This South Texas city along the U.S./Mexican border never saw big home-price gains during America's real estate boom, so it didn't suffer as much in the resulting bust. Add in Texas' fastest-in-the-nation home-seizure process and you have foreclosure conditions that are good for current owners, but terrible for would-be buyers. Foreclosure filings in McAllen fell 66% during 2012, leaving the 775,000-population area with only a 12-month supply of distressed homes available for purchase. That means the typical McAllen foreclosure sold for just a 21.5% discount in 2012 -- well below the U.S. average. "There are definitely markets in Texas that still have foreclosure problems," Blomquist says, "but few are dealing with the huge numbers of distressed properties that we saw elsewhere in America."