In the Upper Valley's hot housing market, new homes that sell for $250,000 are showing up in unlikely places.

They are two- and three-bedroom modular homes sprouting around the cul-de-sacs of a cluster development off Goose Pond Road, a narrow Canaan back way that works its way to Route 10 in Hanover.

They are factory-built ranches and capes planned near the car dealerships off busy Sykes Mountain Avenue in White River Junction, Vt., on the site of a former gravel pit.

And they signal that strategies held out as potential solutions to the region's affordable housing crunch - developments outside of the Valley's central towns or other less desirable locations and cost-saving modular construction techniques - are no guarantee.

"Modular is not necessarily inexpensive, that's for sure," said Anne Duncan Cooley, executive director of the nonprofit Upper Valley Housing Coalition in White River Junction.

Neither, apparently, is real estate in parts of the outer ring.

Housing costs in the core towns of Hanover, Lebanon and Hartford and Norwich, Vt., have soared this year to a median sale price of $322,000, said Gerry Stark, assistant treasurer at McLaughry Associates. That means that half of all house sales were above that figure.

The 2005 median price is a 17 percent increase over the median through mid-Julylast year, he said.

Most of that increase reflects the rising cost of houses in the price ranges below the median, Stark said. That squeeze is beginning to send people who are able to spend $250,000 and more on a home into adjacent towns like Enfield, where the average sale this year has climbed to $257,000, Stark said.

Even with good credit, a family would need a combined annual income of at least $75,000 to afford that price, he said.

The median yearly household income in Grafton County is $58,700, according to a study by the New Hampshire Workforce Housing Council released this spring. With that income, a house price of $175,000 is considered affordable, said Cooley.

There are still older houses in Enfield and Canaan that can be had for under $200,000, said Stark. But it has become increasingly expensive to build new in these towns and elsewhere, he said.

Developers blame the higher prices on increased material and labor costs, higher land prices, and more time and money spent on development review.

"With development costs what they are, (developers) need to get into the over-$200,000 range just to have a nice product," said Andy Musz, a real estate broker and chairman of the Canaan Planning Board.

Modular home sellers can avoid some of these costs by buying materials in bulk, said Hank Huntington, owner of Paragon Homes, a modular construction company in Wilder, Vt. Because they are built indoors, choosing modular homes also saves time from weather delays. As a result, it is still generally at least $50-per-square-foot cheaper than a building constructed on site, he said.

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