"Will premium properties within reasonable commuting distances from major cities...continue to appreciate?"
Yes they probably will unless there are other factors affecting the major city, ie, Ford Motors, etc. cutting its work force by significant numbers; overbuilding in the past few years when mortgage and construction loan money was cheap.
Baltimore with its diversfied economy has been appreciating as people closer to Washington, DC have gone there for affordable housing. Good public transportation between those two cities helps. Washington, DC/Northern Virginia continues to appreciate as the homeland security business brings more companies and employees to the region. However the condo market has been overbuilt, and with the higher rates for loans, many are being rented out as apartments rather than being sold.
So while your logic is basically sound, it is important to understand local factors and future prospects before investing, just like the stock market.
Thanks.
I am pretty confident my city (Spokane) still qualifies as reasonably priced.