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I grew up in Newton, and you could probably afford the Nonantum or Auburndale neighborhoods. They hold whats left of Newton's middle class; younger middle class families were totally priced out of Newton by the bubble. Glad to see it's going the other way again. According to House Savvy, the average house price for Middlesex County, which contains Newton and Arlington, is $450,000 or so; Norfolk County, which includes Needham, is $465,000. You could buy a single family for that in Nonantum or Auburndale in Newton.
Like the other posters said, Newton is much larger than Needham and has more of an urban feel since it is as much a small city as a suburb. Newton is much more diverse than Needham and has more going on. I attended Newton North High School and had a fantastic experience; there is a range of options, programs and languages that Needham simply doesn't have (I studed three languages, for example, including Chinese). However, if a small-town, old-school New England feel is important to you, Needham may be a better fit. If that's the case, check out Lexington and Concord (battle pun not intended) as well.
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