10 Things Retirees Need to Know About Housing

For most retirees, your house is your biggest and most valuable asset. You might be planning to retire in place, sell it to move to a retirement mecca, use it to produce some much-needed income or leave it to your kids as part of an estate. But your home's value can fluctuate over time. Here are ten things to know about the current housing market, according to reports from the Joint Center for Housing Studies at Harvard University and the National Association of Realtors.

1. Home prices are up. According to the National Association of Realtors, U.S. home resales rose in May 2017 to 5.62 million, the third highest level in a year. The median home price has reached an all-time high of $252,800, or 5.8 percent better than a year ago.

[See: 10 Ways to Reduce Your Housing Costs in Retirement.]

2. Some markets are hotter than others. However, according to the study from Harvard University, home price appreciation over the longer term has been unevenly distributed across the country. One in six of the nation's markets -- mostly on the east and west coasts -- has experienced price appreciation of 40 percent or more since 2000. But almost a third of the markets -- mostly in the midwest and the interior south -- have shown declines.

3. Recession recovery. While home prices on average have finally regained their pre-recession peak in nominal terms, in real, inflation-adjusted terms they are still lagging behind.

4. A lack of inventory. While the number of homes for sale is up from recent lows, they are still down some 8 percent from a year ago. So it is still a seller's market. Housing inventory has dropped for 24 straight months as measured on an annual basis.

5. New construction. New home construction rose 5.6 percent last year to 1.17 million units, and single-family homes did even better, growing by 9.4 percent. However, according to the National Association of Realtors, construction has sagged more recently, falling for a third straight month in May 2017 to its lowest level in eight months.

[See: 10 Tips for Finding a Great Place to Retire.]

6. Older units. Over the longer term, residential construction is still soft. According to the Harvard study, residential construction in the past decade has added fewer units to the housing stock than during any ten-year period going back to the 1960s.

7. Fewer starter homes. Construction of multifamily housing is higher now than in the 1990s. But construction of smaller "starter" homes is particularly anemic. The share of homes being built under 1,800 square feet fell from 37 percent of all completions in 1999 to just 21 percent in 2015.

8. A slowdown in hot rental markets. Rents have been rising faster than inflation. But increases from 2016 to 2017 are smaller than they were in 2014 to 2015. In a few select markets like Houston, San Francisco and New York rents have actually been falling slightly from recent highs.

9. A decline in home ownership. The number of owner-occupied households grew by more than 280,000 in 2016. Still, the home ownership rate has fallen to 63.4 percent, marking the 12th consecutive year of declines. Home ownership among African Americans has gone down the most, from 49.7 percent in 2004 to 42.2 percent in 2016.

[Read: Is Retirement a Good Time to Sell Your House?]

10. Generational differences. The millennial generation -- the 83 million people born between 1982 and 2000, according to the U.S. Census Bureau -- created 7.6 million new households between 2010 and 2015. But the share of millennials living with parents or grandparents was still at an all-time high of 35.6 percent in 2015. By the year 2035, according to the Harvard projections, some 50 million households -- or one out of every three -- will be headed by older adults. That will greatly increase the demand for units meeting the needs of aging adults. So you might as well install those bathroom grab bars now to beat the rush.

Tom Sightings is the author of "You Only Retire Once" and blogs at Sightings at 60.