FYI, that 450K figue will hopefully get you a nice starter SFR. Up to 500K is probably doable but not optimal as once you get in you want to start making it nice. The Home Depot trips add up quickly. The truth is w/o an accurate picture of your situation these are very rough guidelines. Hopefully, it will get much more affordable that that for you. I beleive 2 more rounds of Fall/Winter slow sales will open up some much better opportunities and the earliest I would think about buying if I were you would be November 2008 when sellers are seasonally at the bottom of their optimism.
If you end up in a townhome, try to get at least 1500 sq ft. I say this not just for the space but because it will keep you out of communities that you might not be happy in beyond 2 years.
One last thing, if you dont have family support in the area dont forget to account for help with your kids. Even if you are not working, you will need help around the house not to mention some time out with your hubby as a break from the kids.
