'People are going crazy over the good ones': Chicago home prices are surging more than New York and San Francisco

In one of America's hottest housing markets, not even 7% mortgage rates seem to be slowing down sales.

Multiple-offer situations remain a regular occurrence. Realtors prep their buyers to expect months-long searches, while motivated sellers can usually wrap up the entire transaction in a week or less.

That's the current state of affairs in Chicago, where home prices are up 6.7% this year, the most of any large metropolitan area. By that measure, the Windy City's housing market is moving faster than the perennially hot New York region, as well as San Francisco , where artificial intelligence wealth is transforming the market.

Realtors have multiple theories for the continued market heat. Low inventory is a major part of the problem: Greater Chicago had just 16,700 homes on the market as of October, a nearly 60% drop from the typical pre-pandemic fall level of about 40,000. And both the city and Illinois as a whole have long ranked near the bottom on measures of homebuilding activity.

Then there's the city itself: While prices are rising fast, Chicago remains one of just a few major metropolitan areas with big-city amenities and a moderate cost of living. As affordability becomes a bigger concern for millions of Americans, the secret appears to be getting out.

Jeremy Padoor, a real estate broker in the city at Cross Street, said his friends in pricier cities like New York and Los Angeles are floored by the listings he shares online. Compared to the coasts, money stretches further in Chicago.

"You can get a 3-bedroom condo for $600,0000 in a great neighborhood," Padoor said. "That's insane. I think some clients of mine and maybe the general population see it as Chicago is still really affordable for what it has to offer."

That relative affordability helped push Jacquelyn Young-Bowers, 22, to purchase her first home in Chicago earlier this year. The Los Angeles native accepted a job in the city as a data analyst after college and found she was paying less in rent than she would for a similar place in her hometown.

Realizing that a $400,000 budget could land her a mortgage payment similar to her rent, she set out in search of a two-bedroom, two-bathroom apartment in some of the city's Near North Side neighborhood, an area known for easy waterfront access and a strong dining and arts scene. She toured more than a dozen options, nixing some when she realized sellers were listing low in hopes of sparking a bidding war, and others when sellers refused to budge on pricing even as their units lingered on the market.