Looking to make the leap from condo to home ownership.

My wife and I have rented a condo downtown for the past four years. We did not know how lucky we were to find a two-bedroom, 1.5-bath condo to rent for under $800 so close to downtown until now.
When you look around the Rochester city limits, you will see a variety of housing. On the number streets west of Walnut, you will find historic homes, newer large homes, some duplexes, low-income apartments and a fringe of 1950s starter homes. The southwest is a mix of small old homes and apartments. To the northwest there are a mix of arts and crafts, old and new, a 1950s starter home sub, senior living, apartments and some condos. To the northeast you have many condos, a 1950's starter home sub, large estate home subs and a pre-1950s sub. To the southeast is mostly industrial with a sprinkling of apartments and original farm houses.
We have been looking around at the cost of housing in Rochester and have been discouraged.
There is a widening gap between expensive and inexpensive housing. On the low end of property cost, you get very little. For under $800 a month, you can rent a small apartment or a flat if you are lucky enough to find one. Then it jumps up to $900 to over $1,000 for a house, condo or large apartment.
Same with housing. You can buy a small house at 1,000 square feet for under $100,000 if you are lucky to find one still on the market. Then prices jump up into the upper $100,000's to $300k to $500k and up. As a couple just starting out, who have decided they want to buy a house in Rochester, the options are limited. We really want to live downtown, but the housing there is not for young people.
With price tags of $200,000 to half a million, there is no way we are living close to Main Street. The next option is an outer ring of 1,000-square-foot starter homes. Maybe my generation is spoiled and wants to start out having more than our parents did. I just can't see buying a house with tiny closets and tiny bedrooms and starting a family there.
The next option for purchase is a condo. There are many apartment-style condos available at decent prices but the walls are thin and parking is like musical chairs. There are several high-end condos with a several hundred thousand dollar price tag that are way out of our range. We could afford that someday but by then, we will most likely want a larger house. It would be great to live there next to the Clinton River trail but at $200,000 a unit, we could get a nice ranch minus the two flights of stairs.
So why might we have to leave Rochester? Our rent is going up so we are looking around at several real estate websites like Hotpads and Zillow. It is easy to see why people leave downtowns for the suburbs: It's cheaper!
I imagine that is another reason people left Detroit. They left the large older homes for rows of newer houses and strip malls. We personally don't like the idea of living in an endless sea of identical homes and strip malls. We enjoy the character and walk-ability of Rochester.
Don't get me wrong, it is a good thing for a city to maintain its property values, but who will move into the big, old, expensive houses downtown in another generation? I have heard it said that Rochester is in danger of turning into an "old person's" town.
I'm not sure how they are going to entice younger people to move here when their only options are small older homes, large expensive homes, overpriced condos, less expensive condos that are really more like apartments or small apartments.
I am not suggesting that we demolish historic buildings to make way for inexpensive condos. The subdivisions are set in place and the only changes made there are when someone tears down a small home and puts up a mega-home. Perhaps we need to explore new housing concepts with the remaining land we have. Maybe the downtown can grow vertically but maintain its brick and mortar appearance. After Hurricane Katrina, a project was launched called Make It Right. Although we have not had a natural disaster in Rochester, the housing concept can certainly be used here. Building affordable, green, efficient housing is something that would attract people to the area, including us. While Rochester is a great mix of old and new, time does not have to stand still here.
Take a look at the attached maps. You can see that Rochester has an interesting border. The other maps show home pricing. There are certainly some extremes. As we are getting ready to make our next step from a condo to a house, the leap may be too large for us.
We enjoy the city life and want to be a part of the growth but maybe we'll just have to come back when we're all grown up!