Location vs Price

I asked that question on Trulia.com last week- which is more important to first time buyers. A lot of other real estate agents answered. They didn't say anything, just blathered on about how both are important and people need to find the right location with the right price. Obviously. But I really want to know what others think about giving up on living in their favorite neighborhood because they can't afford it, and all that entails such as longer commutes to work, friends, family, not being in the preferred school district, or having access to amenities? And what about people that are willing to pay more than they would like to have those things- do they regret it? End up loosing the house? I know that when my husband and I bought our first house we ended up looking for over a year because we were unwilling to live in certain areas, and we ended up paying a little more that we had originally thought we would to be in a neighborhood of our choice. And we are still about 30 years away from being able to afford the kind of house we want in our dream neighborhood! Just as I was thinking about this issue I came across an article about this subject, below is an excerpt that I think looks at the issue logically, while not ignoring how people actually approach buying their first house (illogically).
"Although buying cheap housing may be a good strategy for some investors, buyers searching for a home they'll occupy should not let price be the primary factor influencing which home they buy.
A home that won't work for the long term is not a good deal even though it's cheap if you'll have to move again in a few years. In fact, you could lose money using this approach, particularly if home prices haven't stabilized by then.
It's also not a good idea to buy a home that's not quite right for you just to take advantage of today's low interest rates. The winning strategy for today's homebuyers is to buy and hold.
The homes with qualities that are in high demand are located near a major metropolitan center or have good public transportation to get there. They are close to shops, cultural venues, restaurants, parks, and have good public or private schools close by and good public services.
The location within a neighborhood, condominium complex or cooperative can make a big difference in value. A home on a quiet cul-de-sac will generally sell for more than one in the same neighborhood that's on a busy street. Premiums are paid for homes with views, leveled-out private backyards and good natural light.
Be wary of listings that appear to be underpriced. They could be priced low to generate multiple offers, so they might sell for more than the list price and more than you can afford to pay. Or, there could be other reasons why they are listed at a lower price.
Often the lower-priced homes in an area don't sell for more because they have incurable defects. An incurable defect is something you can't change like a shared driveway, close proximity to a freeway or an entry to the home that's two flights of stairs up from the garage.
These homes may sell well in a hot sellers' market when buyers overlook defects because prices are rising rapidly. But, these homes can be hard to sell in a down market when buyers are less forgiving and are willing to wait for the right house.
THE CLOSING: Ideally, you want to buy a home that will be in demand in any market. If you can't afford to buy one that's in move-in condition, it's better to buy a home you can afford and that needs only minor improvements than one that looks great but has an incurable defect like an unworkable floor plan." Source: Dian Hymer