Doesn't sound like a good move to me. Maybe it's just my experience in the work force, but to me unstable jobs almost demand more pay to compensate for the risk that you may have to live for a while on the extra you're being paid. Not the case here -- especially if the pay is so low that you can't move there without dipping into retirement funds. What are the chances that, if the grant funding this job goes away, there will be another job for you with this organization or elsewhere nearby?

It sounds like there will be plenty of stress all around at first, only some of which goes away. So work is enjoyable? There's still another 120+ hours a week when you're not at work. Even your description of the workarounds doesn't show tons of enthusiasm:
Could buy a foreclosure about an hour away but it would be an hour away and then there is commute
Now you're spending two hours a day on the road (or bus or whatever) and coming back to a house that may require major work (and/or money spent) on your off hours.

Unless your skill set and interests are so narrow there are only a few jobs in the country which will take advantage of them or unless you've been looking for a new job for a long time fruitlessly (I'm sorry; I haven't kept up if that's the case), I'd either try to negotiate a higher salary or a different position/higher grade or I would pass this one by.