Where the Affordable Suburbs Are

(page 2 of 2)

In the suburbs immediately outside of Washington, a city that saw huge appreciation during the boom and has since slowed, prices are actually rising because the supply of homes is limited, Maloney said. Conversely, home prices are falling in fringe areas, miles away, where developers overbuilt, he said.

Location and affordability are primary considerations when buyers choose a suburb. The most important things are "quality of the neighborhood," "convenience to job," and "affordability," according to a National Association of Realtors survey completed a month ago.

Sperling said he tried to find places where the population was growing, an indication the place is desirable.

Blooming Communities

In the case of Phenix City, Ala., located across the Chattahoochee River from Columbus, Ga., and the Fort Benning Army base, people are moving to the area in droves, said Victor Cross, president of the Phenix City/Russell County Chamber of Commerce. An influx of about 35,000 people is expected over the next few years as the result of the relocation of the U.S. Army Armor Center & School from Fort Knox, Ky., to Fort Benning, Ga. The town is sprucing up its downtown and builders are preparing to accommodate the new arrivals by putting up new subdivisions, Cross said.

"It's a strain on health care and education," Cross said. "But when the dust settles, it's great for everybody—there will be a huge positive economic impact."

Putnam Valley (N.Y.) supervisor Sam Davis said his town with its winding roads, lakes, and horse farms still has a rural flavor, which is being threatened by development. He said new people are moving to Putnam Valley, looking for a relatively affordable place to live, and they're helping to push up home prices and property taxes.

Putnam Valley is somewhat affordable, especially compared with neighboring Westchester County, in part because the town is not on the train line to New York City. Residents generally drive to work. Manhattan is approximately an hour away by car.

Closer to home, many Putnam Valley residents work at IBM (IBM) and Pepsi (PEP) in nearby Westchester County, and General Electric (GE) in Stamford, Conn.

"Anybody who wants to move here should buy an existing home, not a new one, if we want to keep it as the 'best affordable,'" Davis said.

Sperling said his favorite affordable suburbs have a "small town" quality of life. He especially likes Coralville, Iowa, near Iowa City, the home of the University of Iowa. And Snohomish, Wash.—about 15 miles northeast of Seattle—is "separate enough from the metro area that it has its own distinct quality, with a sense of history and a real downtown."

Click here to see the complete list of the 50 Best Affordable Suburbs in the U.S. for 2007.

Gopal writes about real estate for BusinessWeek.com in New York.