I hate it when statistics say Allegany County is "the poorest county in the state". I feel Allegany County has priceless amenities as the answer before mine mentioned. Counties should not be measured on money and industry alone. You cannot put a price tag on the friendliness of small town people. When you are stuck in a snow bank, you will have 4 people ready to push you out in minutes. You can run into the local store and ask for a "thing a ma chig" and they take the time and know exactly what you need. All this while leaving your car running in front of the store. There is no need to lock your car over night..... I sell real estate all over Allegany County and one of our proudest selling points are: we don't routinely use lockboxes, because no one ever locks their house!
Of course, there are down sides to living in a small town out in the middle of no where, but boy I have to say:
WE HAVE IT MADE!

Friendship NY is located in Allegany County, NY - the poorest county in the state. So, houses are very inexpensive all over this area. There are some real bargains that include new houses which would be half a million or more if they were two hours closer to NYC and you can pick them up for under $300k, even under $200k. Not many new people move into the area. Many move back after successful careers elsewhere. Lovely area - family skiing, fishing, hunting, organic farms beginning and the arts with the Art School at Alfred University. As Mike mentioned there are real deals in Buffalo and Rochester and this extends to the Southern Tier.

I once took a spin through Friendship when I pulled off the Southern Tier Expy looking for a public washroom (I didn't find one!). Friendship is a very nice little town, the old houses are very well preserved, and as of 4 years ago there was a cool mom-and-pop grocery in the center of town. There was also a cool New England style town green surrounded by big old houses. When I stopped in it was a late weekday overcast afternoon and the town had an almost creepy empty feeling to it; in reality it's probably just a bedroom town and everyone was at work / at school / or elderly /retired.

Anyway from what I could tell the busy small town life is in the surrounding towns. I finally found a washroom and gas in a nearby town and I can't begin to remember the name (next town over to the west). The nearby town was bustling but it wasn't nearly as nice as Friendship. It doesn't appear that much has happened in Friendship in at least 30-50 years (much as in new development / new industry), which is good if you're a fan of historic preservation. I'm a fan of small towns and I liked how this town wasn't bulldozed by fast food joints and other bad 60's suburban style development.

Cheapness Factors:
* This area of NY is fairly remote, and it doesn't seem like there's a whole lot pushing real estate prices either way. The nearest big cities are Buffalo, Erie, and Rochester; all three of which are relatively cheap compared to the east coast.
* When I worked in Columbus, OH, I met quite a few younger upstate NY'ers who left upstate NY because there are few jobs for the young college educated set.