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California
As if the financial markets needed another reason to have no faith in the ratings of the credit rating agencies, here is a bloomberg article providing just that: http://www.bloomberg.com/news/2012-04-25/california-above-deere-makes-ninth-largest-economy-a-deal.html INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.
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It is interesting to see that hardest hit states from housing are leading gains in employment.  It is important to remember why states like California, Florida, Arizona, and Nevada were growing so fast to warrant the increasing home prices in the first place.  They are very desireable places to live, particularly for the baby boomer...
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