Is it impolite to ask how much money a person paid for their house?

Yes it is. If you are considering buying in the area you could say, "My husband and I (or my wife and I) are considering buying a house in the same area. Do you mind me asking APPROXIMATELY what houses are going for around here?" Either this or phone up one of the real estate Agents (there should be signs on the lawns of the homes that have been sold or are still for sale.)