By Jill Ralph. In and adjacent to the most desirable cities, housing prices are rising. Andrew Schiller, a geographer and president of Location Inc., says he believes that within each metropolitan area there can be hidden bargains. In what Schiller calls undervalued towns, you will find " ... many premium qualities -- like good public schools, low crime rates, and educated neighbors. In undervalued towns, median home prices are surprisingly low compared to other area towns."

Schiller studied America's 61,000 census tracks using data from the Census Bureau, Department of Education, Federal Housing Authority, and FBI to create NeighborhoodScout, a neighborhood-matching database.

"People want good places for their families, but prices can be prohibitive. I discovered great options for real people right in the metro areas in which many Americans live and work," Schiller said. The findings are:

1. Scotch-Plains, N.J. (New York City)

2. Simi Valley, Calif. (Los Angeles)

3. Mundelein, Ill. (Chicago)

4. Silver Spring, Md. (Washington, D.C.)

5. Dublin, Calif. (San Francisco)

6. Havertown, Pa. (Philadelphia)

7. Sharon, Mass. (Boston)

8. Lathrup Village, Mich. (Detroit)

9. Colleyville, Texas (Dallas-Ft. Worth)

10. Sugar Land, Texas (Houston)

(Note: All of the undervalued towns are within 40 miles of the cities in parentheses.)

In other findings, Schiller concluded that the luxury market performed well in 2002, with prices for houses at $1 million or more rising 3 percent overall. "Luxury-home values in California held their own in 2002 in spite of continuing economic uncertainty," said Katherine August-deWilde, COO of First Republic Bank. "Because of the unknown nature of world events, we remain cautious about values in 2003, but we see no significant signs of decline.

Learn more about markets featured in this article: Los Angeles, CA.