No. 3: Merced

Homes are left partially constructed in May in <a class="taxInlineTagLink" id="PLGEO100101101011190" title="Merced" href="/topic/us/california/merced-county/merced-PLGEO100101101011190.topic">Merced</a>, Calif., after developers halted projects amid low demand. Forbes found the economic downturn and housing bust hit Merced particularly hard. Home prices have plummeted and unemployment at 16.2 percent is the highest in America, Forbes says.

( Brent Foster/Los Angeles Times / May 5, 2008 )

Homes are left partially constructed in May in Merced, Calif., after developers halted projects amid low demand. Forbes found the economic downturn and housing bust hit Merced particularly hard. Home prices have plummeted and unemployment at 16.2 percent is the highest in America, Forbes says.

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