About 9 years too late…
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Just go to redfin and check out the sold listings in PA in the past 3 months. It doesn’t cost that much to just remodel an existing house. Cost starts to become more significant when you expand or move rooms around, but still.
For 3.5 you can get a very decent house in north PA. One example:
https://www.redfin.com/CA/Palo-Alto/1879-Hamilton-Ave-94303/home/1353217
Have you seen this place? 
I didn’t. Only looked at pictures in the listing. What’s wrong with the house?