Are you planning to retire and move? Not so fast

Before the housing bubble burst, retirement real estate was on a roll. Older Americans could leverage high housing prices to buy second homes, move to the Sun Belt or just tap into equity to generate cash.

The real estate crash of 2008 put a stop to all that. A recent report from the Joint Center for Housing Studies of Harvard University finds that the mobility rates among older U.S. homeowners showed the sharpest drop of all age groups, falling 39 percent since 2005. (The study defined mobility as the number of people who reported a change in their primary residence in the past year, and reflects moving patterns in 2009.)

The study -- The State of the Nation's Housing 2010 -- predicts that some homeowners "may never be able to retire elsewhere" unless housing and financial markets stage a sharp rebound.

Less equity, less mobility
What are the odds this will occur? Financial markets are impossible to predict, although stocks have rebounded significantly since the 2008 crash. But the prospects for real estate are fairly clear - and the outlook is dim.

The Harvard report predicts that the country's continued high joblessness will continue to weigh on housing, along with a big overhang of vacant properties currently off the market and the large number of homeowners who owe more on mortgages than their homes are worth.

We had the lowest pace of new home sales in June since the government started keeping records in 1963; overall, single-family home prices rose more than expected in May due to the now-expired home buyer tax credit, according to the Standard & Poor's / Case Shiller home price index. But S&P isn't forecasting a sustained upturn anytime soon.

Retirement well-being
What does the weak housing market mean for retirement planning?

If you plan to retire in the next five to 10 years, assume that the real estate market you'll retire into won't be much different from the one we've got now.

But reduced housing mobility is an opportunity to rethink your plans - and that could be a blessing in disguise.

"Maybe for years you have been thinking of cashing out on a big pot of home equity and moving off to an idyllic retirement area - and maybe that wasn't the right move for you anyway," says John Nelson, co-author of "What Color Is Your Parachute - For Retirement?" (Ten Speed Press, 2007).

"It might have been an old dream from your parents or somewhere else about a laid-back leisure lifestyle that you haven't really examined closely. Maybe what you really want is an engaging volunteer opportunity where your social network is - or a business opportunity close to where your market is, or fulfilling family activities. Go back and identify clearly what this next stage of life really will be about for you - it's not necessarily the old fluffy idea of retirement."

Nelson wrote his retirement guide with Richard Bolles, who wrote the best-selling career books ever published under the "Parachute" banner. Their retirement book recently was reissued in a revised and enhanced second edition. It's one of the most thoughtful, engaging retirement planning books available because it lays out a specific, valuable planning model called the Retirement Well-Being Model.

A key set of decisions within the retirement model relates to where you'll live in retirement, including geography, residence, community and region of the country.

Nelson cautions that depressed housing values shouldn't rule out the possibility of a move. "Even if your property has lost value, maybe a place across town has lost just as much value or more, and it's a good time to switch."

Universal design
If you plan to stay put, consider making some modifications to your home to accommodate aging. The best way to do that is by employing universal design - a set of architecture and design principals geared to providing suitable living environments for a diverse range of people.

For older people, that can encompass anything from the height of countertops and electrical sockets to usability of faucets, door levers, switches and appliances. Some of the best ideas include wide, no-elevation entrances, comfort-height toilets, lever door handles, safety grab bars and better lighting.

Nelson cautions homeowners to take a conservative approach to remodeling, given the weak outlook for home prices. "Be judicious! Doing a universal design update to your home doesn't mean doing the addition of your dreams," he notes.

The silver lining? "If you think the place where you're living is your lifetime residence and you want to be in it as long as you possibly can, it's a good time to hire contractors because the market is so slow. If there are some judicious changes you'd like to make to your house, this is a cheap time to get it done," Nelson says.

Mark Miller's Retire Smart column is carried on Tribune Media Services.