Worst housing market in the next 3 to 5 years

The MarketWatch Local Market Monitor identified the best and worst U.S. housing markets, and what markets to avoid in the next three to five years.

The monitor named McAllen, Texas, as the top housing market in the United States, due to its strong economy and job market, which grew 4 percent in 2011. The worst housing market, on the other hand, is Wilmington, Delaware. The local economy of Wilmington continues to lose jobs, and house prices keep falling. The monitor does not expect Wilmington's market to turn around for another three to five years.

One factor that is driving down home prices all over the country is real estate investors putting down low bids on homes. The latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey found cash buyers in the housing market reached 33.2 percent in December 2011, up from 29.6 percent in 2010.

In addition, 74 percent of all homebuyers last month paid in cash, which is a more appealing option for sellers. Cash sales tend to close in 21 to 30 days, much faster than regular offers, and these buyers expect to see home prices drop 15 percent to 20 percent off list prices.

More News