No. 2: Raleigh, N.C.

Real estate developer Greg Hatem worked in Beijing during the boom years of the 1990s, and he senses that same Wild West capitalism in Raleigh right now.

WORK IN PROGRESS

Population: 995,662

Population Growth Since 2000: 19.9%

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Percentage of Workforce in Creative Class: 36.1%

Cost-of-Living Index: 99 (100 being national average)

Median Household Income: $56,150

Income Growth Since 2000: 10.3%

Take Our Walking Tour Through Raleigh (opens in new tab)

His Raleigh Times Bar represents the unofficial cultural epicenter of the new Raleigh; it sits on a corner of Fayetteville Street, which is the keystone of Raleigh's Livable Streets project, a plan to bring urban living to a city that languished as its suburbs and exurbs flourished. The bar, which offers 50 Belgian beers, attracts the young and old, hipsters and preppies, plus folks from the University of North Carolina, North Carolina State University and Duke University.

Those three research schools fuel a smart workforce, the main reason companies relocate to the area. Many work at nearby Research Triangle Park, where top employers IBM and GlaxoSmithKline reflect the area's strong employment in computers and pharmaceuticals. The city of Raleigh has its own technopolis in the Centennial Campus, which is part of North Carolina State. This amalgam of university, government and business enterprises employs more than 3,000.

Raleigh is a work in progress, but 2008 should be the turning point. The city's new convention center will open this year, as will an adjoining Marriott hotel and the city's tallest building, RBC Plaza. The Royal Bank of Canada's U.S. headquarters is the kind of real estate Raleigh mayor Charles Meeker wants more of: a mix of office, condos and retail. "Our big challenge is more urban-style growth," he says.

But there's enough of an urban taste today for Rob Currey, 27, who recently moved to Raleigh after stints in big East Coast cities. Currey works for Cherokee, a private-equity firm that specializes in cleaning up contaminated sites and developing them for its real estate funds. He and his wife, Joy, bought a home in the historic Oakwood district, where he has a "ten-minute walk to work -- and a two-minute commute if I drive." The location gives them access to such downtown amenities as theater and music performances at the Progress Energy Center for the Performing Arts.

If urban isn't your style, and you want the ultimate in suburbia, nearby Cary is your spot. The streets are wide, and pristine business parks are surrounded by pristine residential neighborhoods. The town, like Raleigh, still has reasonably priced housing. You can buy an older, four-bedroom colonial for less than $300,000, and a spanking-new 2,500-square-foot home for $400,000.

NEXT: No. 3 -- Omaha

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Bob Frick
Senior Editor, Kiplinger's Personal Finance