(MONEY Magazine) – Location, location, location. It's the cliché of choice for real estate. But in the great landgrab that modern American home ownership has become, the meaning of location has evolved. The unprecedented boom and upward mobility of the 1990s inspired people to abandon familiar zip codes in search of towns (often in other parts of the country) that can offer a more balanced life. Fueled by favorable interest rates and the need for good public education, economic opportunity and day-to-day comforts, mid-career folks now expect big-time benefits from small-town life. And many are willing to pay a premium to live that life.

To generate this list of America's hottest towns, we screened a decade's worth of data for communities with above-average population growth (which naturally leads to smaller places), above-average income and above-average home prices. We cut towns more than 60 miles from a major city and those with limited cultural or recreational offerings. Then we used a metric we call the housing premium ratio to measure local real estate prices against local median income--to see, in other words, where people are most willing to devote a high multiple of their annual income to live happily ever after.

Exactly 87 towns made the final cut. We've divvied them up by population (above and below 100,000) and listed them by region (East, Central and West) in the tables at right. For deeper data on these places--and for quality-of-life stats on more than 1,200 towns across the country--go to money.com/bestplaces. But first, here's a brief look at each of the top-ranked towns.

POPULATION UNDER 100,000

East: Sugarland Run, Va. History, horses, high tech

It's near Civil War battlefields, hunt country, the Potomac River and the Beltway. George Washington actually slept nearby. But the community association that is the unincorporated town of Sugarland Run is just 32 years old. Newcomers find good schools and affordable housing options within the teeming D.C. exurb of Loudon County--most homes still are under $300,000--all within half an hour of Dulles airport and the federally subsidized cultural life of Washington. A rich nexus of employers in the area--many of them defense contractors and tech outfits--attracts workers flocking in from Atlanta, San Antonio, San Francisco and elsewhere.

Central: Woodbury, Minn. Green, growing, family-friendly

One of the fastest-swelling suburbs in the Twin Cities region, Woodbury is just southeast of St. Paul, the state's capital. Think green. The town boasts 1,600 acres of parklands, and neighborhoods are connected by 70 miles of walking and biking trails. Major employers in the area include State Farm and 3M. Here, family friendliness is more than a slogan on a city seal: In spite of state budget cuts, the town recently finished a $7 million indoor park, with a playground and waterfalls. According to one 2003 local survey, Woodbury residents say they're willing to pay more property taxes to maintain valued town services.

West: Rancho Santa Margarita, Calif. The ultimate commuter's compound

Southern Californians commute for a living, literally, and Rancho Santa Margarita residents clock in at just over 33 minutes on the road each way, on average. The trade-off is pristine California living in a highly planned community where little is left to chance. Nestled in the foothills of the Santa Ana Mountains, 5,000-acre Rancho Santa Margarita was just incorporated in 2000 and is almost an homage to urban planning, with palm trees evenly spaced and traffic lights synchronized to the second. There are 10 parks, four pools, numerous recreational fields and a man-made swimming lagoon, all held in common and maintained with dues paid into a homeowners' association.

POPULATION OVER 100,000

East: Cary, N.C. Trees and Ph.D.s

Shade trees are everywhere, the mayor answers his own phone, and neighbors know each other by name. But for all its folksy charm, Cary is deceptively high-powered. Mayor Glen Lang is also the millionaire CEO of a wireless broadband company. The town has the highest median income in North Carolina ($77,091) and claims the highest percentage of Ph.D.s in the country for towns with more than 75,000 people. Something in the water? More likely it's the 14 major universities within an hour's drive and North Carolina's famed Research Triangle Park, whose tenants include Cisco, Ericsson, IBM and Nortel.

Central: Naperville, Ill. Rhymes with Neighborville

Naperville's farm-town roots have given developers plenty of space to work with even into the 1990s. And unlike many Chicago boom 'burbs, Naperville seems tailor-made for families, with its lively and strollable town square, ambling riverfront trails and former quarries for swimming and paddling. The local public schools are ranked among the best in the state, and many residents work at the big technology and service-sector companies that line long stretches of the I-80 tollway. A half-hour train ride to Chicago satisfies both high-culture urges and deep-dish-pizza cravings.

West: Plano, Texas Nothing plain about it

A burgeoning burg 20 miles north of Dallas, Plano has for years been collecting plaques from business and community groups praising everything from its schools and parks to its municipal budgets and solid-waste-treatment plants. In part, Plano has Ross Perot to thank. In 1985 his Electronic Data Systems was the first company to set up shop in a business park in the dusty plains of northwest Plano. Frito-Lay soon followed. Today the town and its outskirts are home to 21 of Dallas-Fort Worth's more than 260 publicly traded companies. The community that has developed is both upscale and caring--a children's clinic regularly provides free medical treatment to kids without health insurance.