I live in the "country" and you won't find decent houses in the 40k range even here. Those houses are typically "spec" houses in massive subdivisions where the comps have gotten hammered by multiple foreclosures. There are good deals to be found though if youre patient.

Right now you're still better off to get a low interest mortage and get houses at their depressed value then you would be to save up and buy a house in 5+ years