There are areas of Missoula that suite different kinds of lifestyles. And the prices here tend to be high, compared with the average across the country. A few years ago it was said that Missoula was ranked #2 in most overpriced housing in the Western US. We just refinanced our home, and were told by the appraisal guy that prices were holding (not slipping) but that was back in december.
So, the lowest price housing would be in East Missoula, the North Side, and Central Missoula. Those tend to be more of the low income areas, but there are pockets of great housing. The University area is super overpriced, as well as parts of the Rattlesnake and Grant Creek. There is affordable housing out by the airport; it is a housing development with cute little craftsman style homes that are super close together... so very small lots/yards. but you can get a new home for a great price. Anyways, I think you just need to be here to see what would fit in with your preferences. There are other nicer areas, anything in the south hills or Miller Creek tend to be nice. If you're looking for a commute, yes there are places that are less expensive. Lolo is 8 miles away, the houses are priced for less than Missoula, however, there is not a real community there... our realtor lived there and described it as a truck stop. Which some people don't mind and some people do. There is housing both ways in communities up and down the interstate. But honestly, if you can swing it, I'd try to find something in Missoula. The community in Missoula is great, and there's a lot going on. Personally, I have a 20 minute drive to downtown Missoula (and I live in Missoula) and I wish I was closer.
Anyways, there is another area south of the River, west of Higgins, and east of Russell... those neighborhoods can have some good finds in them.
Oh, and I bet you'd be able to negotiate well because there are a lot of houses on the market.
What ages are your kids?