3. Bridgeport, CT
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The last place you'd expect to find undervalued real estate is in tony Fairfield County, home to ultra-exclusive towns like Greenwich and Darien, where the Masters of the Universe retreat after a tough day on Wall Street.
But a mere 20 miles up the coast lies the hardscrabble city of Bridgeport, which has long suffered from sleazy politics and urban decay but is finally cleaning up its act. The average home price is severely depressed - $280,000, compared with $840,000 in the county's other large urban setting, Stamford.
But the wealth is starting to spread: As more businesses have left New York for Greenwich and Stamford, more middle-class workers - entry-level professionals, executive assistants, and so on--have come too, and they're keen to take advantage of bargain prices.
"Bridgeport has fixed the corruption," says Norman Feinstein, a principal with New Jersey-based Hampshire Funds. "The local government is pro-development, and buildings are being rehabbed."CAUTION:
The new demand is not organically driven by Bridgeport's economy. If the New York business climate starts to slip, all bets are off.