So, Linda, should they buy a $220,000 house in their dream beach town or rent it for $1,000 a month? Leitz's answer is, "Buy it." And here's why: "They're young and healthy enough and committed enough to the area, so it makes sense, especially if they take out a mortgage and invest the rest, instead of buying outright," Leitz says.

If they bought a home in South Carolina for $220,000 and put down 20%, their monthly mortgage payment on the balance, $176,000, over 30 years at 6% would be $1,055. They then would have $176,000 in cash to invest. Leitz says she would break out investments accordingly: with about $60,000, or five years of mortgage payments, going into CDs and Treasurys paying 3.5%, while the rest, $116,000, is invested in stock and bond mutual funds. Depending on what the markets do, that strategy could pay the mortgage for decades. The benefits of home ownership include tax deductions for their mortgage and state taxes, which would really add up over the years to offset ownership costs.   

Another benefit? Avoiding a rising rent environment that could strap them for cash or force them to move. "If everyone starts renting or you happen to rent in a particular trendy area where people start to flock, your rent payments could increase significantly," Leitz says.

"I don't think buying is right for everyone," says Leitz. "An older client or someone in poor health who may want the flexibility of moving closer to family, or into a care facility if their health takes a turn for the worse, may truly benefit from renting."
Renting might also be appropriate for folks who have some real estate savvy and wanted to bargain hunt before buying a home-they would have some time to track the price movements of properties that interest them. But Leitz says she's uncomfortable timing the real estate market.

Still, clients who have less than a five-year time horizon may be playing a game of Russian roulette if they sink significant sums into real estate markets that are nose-diving right now. Myrtle Beach and St. Petersburg both come to mind. High-net-worth investors won't feel the pinch so much if they carry a property for a few years longer than they hoped or take a loss. Middle-class clients will.

As we're all learning the hard way, housing markets, like stocks and bonds, don't always recover in a fashion that is timely for investors. What can advisors do as investors approach retirement with dreams of owning in the mountains, on the lake or at the beach? Helping clients thoroughly research their desired destiny, so that they get a clear picture of what is happening with sales, prices, inventory and days on the market, is a true way to add value.

Then ask the tough questions like: What would happen if you got sick and your new home didn't sell for a year? Are there advantages to renting? How long do you plan to live there? Are you sure you want to buy a condo when there appears to be a glut on the market, they're sitting on the market for 400 days and prices have nose-dived 25% in the past two years?

More and more, state and local realtor associations are doing online newsletters for their members that are just chock-full of the very information and statistics that can help clients make informed decisions.

Even wealthy clients will appreciate you giving them intelligence about what is selling and what isn't in their neighborhood of choice. What client isn't going to appreciate a call from you telling them: "Hey there, just wanted to share some statistics I found about your retirement destination. Just sent the information to you via e-mail. Let me know if you have any questions."

It's critical that retiring clients see the cold, hard facts about a desired destination before they make a real estate decision, especially if it's a place that they have fantasized about but never really experienced firsthand as a resident. Leitz has clients in their early 50s who bought in Florida a couple of years back and now hate the humid weather and miss their friends back in Colorado. "What you do on vacation is totally different than what you might do when you live there. Now they're saying: 'How do we get out of this?' Lucky for them, they'll just about break even," Leitz says.