By Barbara Steinhauser
Since transplanting from NYC some years ago, Barb Steinhauser has been part of the social, philanthropic, and professional fabric of Chicago. She has served on the Woman’s Boards of Landmark’s Preservation, the Field Museum, and Rush Medical Center. Barb is equally at home playing tennis at the Saddle & Cycle or golfing at the venerable Rolling Rock Club. A residential broker at Compass Realty, Barb, brings 25 years’ experience in residential real estate, high-end sales, and financial services to Chicago’s affluent clientele. Having owned several co-ops and condos with her family, Barb is well versed in Chicago real estate. Classic Chicago asked Barb to go behind the headlines proclaiming the Great Wealth Transfer and tell us more.
Barbara Steinhauser Photo by Alina Tsvor
CC: Set the Scene for Us:
Barb: “Enormous wealth is going to be transferred down over the next few years, and real estate will be a very significant vehicle/investment as part of this transfer. Cerulli Associates and others report that $68 Trillion will be transferred from Baby Boomers to their beneficiaries over the next 25 years. Why? 10,000 Baby Boomers turn 65 every day. They are living longer and are healthier and more active than any previous “senior citizen” generation.
“It used to be that a benefactor passed assets along after their death. Now, the Boomers prefer “giving while living.” The managed transfer of their wealth has begun but will be transitioned over time, giving them a chance to enjoy longer, fuller lives with their families and have enough left for their own health care.”
CC: As a broker, how are you reacting to these headlines?
Barb: “I am focused at the moment on the Millennials (ahead of Gen X and Gen Z) as they stand to benefit the most from the transfer. Millennials are 25% of the US population. They are now 42% of US homebuyers and 61% of the first-time buyers. Experts say they will be the largest beneficiaries of the GWT and that they will be putting their money into five buckets: experiences, real estate, travel, health & wellness, and tech & toys. This is astute as it is estimated that historically, 90% of millionaires created a good part of their wealth through real estate holdings.
“Millennials have very distinctive behaviors and expectations. They are racially and culturally diverse, open to alternative lifestyles, more global than previous generations. They are the disruptors and game-changers of our cultural and economic lives. They are entirely comfortable with technology, social media, and the sharing economy. They are very accustomed to information sharing, and they rely heavily on peer reviews for transparency in opinion and advice.
“They are educated, stayed single longer and have only recently begun to enter the real estate market because they came of age during the Great Recession when many of them had to move back home after graduation or at best, rent with a roommate or two. They also had the burden of school debt. Experts say the generational shift in home buying is just now getting underway.”
CC: What are the real estate trends you see among Millennials?
Barb: “There is still a large percentage renting, but the latest economic recovery has produced somewhat of a surge in Millennial home buying. They represented the largest share of the home buying market for the past five years in a row because the oldest of them have had time to advance in their careers, pay off student debt and the rent-free time at home produced savings. It is also fair to say that some of their parents may be subsidizing monthly payments and making down payments. But they are moving out of the house.
“Having waited longer to buy, these first-time buyers are skipping the ‘starter home’ and jumping to a higher entry price and luxury level. They are avoiding ‘fixer-uppers,’, and while they might consider customizing a new home, they don’t want to renovate. ‘Turn-key’ is the goal. And don’t offer them any brown furniture…they have a keen vision as to how they want to live…in smart homes with an open, clean, and minimal look.”
CC: How have the Millennial homebuyers changed the real estate industry?
Barb: “The whole approach they take to the process is different. Not a surprise, technology is playing a large role. This generation uses mobile devices for everything, and when searching for a new home, they search, critique, and price a home from the palm of their hands.
“They do understand the value of using a real estate agent, but whereas an agent used to be the gatekeeper of the information a buyer or seller had on the market, now the client has access to all the data. The agent provides the market and deal experience, the reach of networks and relationships with other brokers and vendors as well as the marketing tools for today – the photography, videos, live streaming. They will choose agents with a relatable, straightforward communication style. These new clients want to partner with their agent with a much more active role in their search or their sale, so an agent must be comfortable using and communicating using tech and mobile devices.”
CC: How do you and Compass approach this new reality?
“Compass was founded by two Millennials who are themselves disruptors and game-changers: Ori and Robert, as they are known to all in the company. Knowing the Millennial mindset, they created the firm as a fast-paced, high-end, agent-centric, tech real estate brokerage company. Upper management represents the best class from many of the big tech and marketing companies. There are 13,000 agents nationwide and hundreds of engineers on the tech and marketing teams. This is incredibly important to provide us agents with all the tools we need to serve this new client base. All of the agents are hand-picked veterans, respected, and referred by their industry peers.
“There is a collaborative team culture that is empowering and entrepreneurial. Recognizing that the first showing of a home is now online, Compass was out front on providing stunning photography and marketing pieces, clear and concise data and user-friendly tech to our clients. We don’t want Millennials “swiping left” on any Compass property because they weren’t captivated at first look. There are several services we can offer our clients that set us and Compass apart – Compass Concierge, Bridge Loans, Compass Collections.”
CC: What are some specifics about Millennial buyers?
Barb: “Happy to share this cheat sheet I have created.
* Most will stay downtown until the suburbs create more public spaces to gather – parks, coffee shops, pet amenities, music venues, dining, exercise facilities, etc. Burbs already have the highly-rated public schools and green spaces.
* Most who choose to buy downtown will look to high-end condos and single-family homes with luxury amenities. Co-op ownership is still not understood by most Millennials and doesn’t have the amenities Millennials expect. This is worth exploring.
* Most would move to up and coming neighborhoods near their jobs–think Fulton Market, Ukrainian Village, Lincoln Square, Pilsen–as long as the home is in near move-in condition, has good school options and is near public transportation.
* Most will customize but won’t do extensive renovations. Will look to reduce carbon footprint if possible.
* Most will skip the starter home as they have saved enough money living at home or with roomies to have their first purchase be of higher price and quality. New developments with amenities are favorites.
* Most will keep the size of the home scaled-down, even if it is luxurious in other ways. Property size, however, would be a large as they can afford.
* Few/none will buy McMansions.
* Some will choose to continue to rent their primary home. Like most choices, this will depend on rental prices and interest rates.
* Some will rent for themselves but buy a property to rent out to others as a means of wealth building.
* Some will continue to rent in the city and will purchase a second/vacation home first, somewhere outside of an urban area, because their dollar will go farther.”
CC: So what is the take- away?
“The take-away? If you plan to sell your home in the future, be prepared to use digital marketing, stage the home correctly, price it realistically, and use a broker that understands Millenials!”
With over 25 years of experience in residential real estate, high-end sales, and financial services, Barb offers what very few real estate agents can: an unparalleled level of concierge service combined with in-depth market knowledge, marketing savvy, and extensive personal and professional networks. She has worked with individual homebuyers and sellers, investors, and developer clients. Barb knows that real estate transactions can be stressful and sensitive. She’s earned her solid reputation and clients’ respect by demonstrating discretion and integrity with thoughtful, personalized attention to their needs.