Scant supply, fierce demand lead to surging home prices in the suburbs

Late last year, Dustin and Nicole Heinrichs decided their family of four kids and two dogs had outgrown their Hoffman Estates home.

Their home search led them to a January open house in Arlington Heights where they met real estate broker Holly Connors, who showed them nearly a dozen properties.

They made offers on two and were outbid on both. For one of them, they offered $35,000 over the list price and were rejected. The other sold for $100,000 over asking.

The need to sell their home as part of the purchase agreement, and unwillingness to waive an appraisal contingency, presented additional challenges.

“Basically, people were selling their souls, waiving all contingencies,” said Dustin Heinrichs. “We weren't willing to do that.”

But some buyers are willing to do that. In the Chicago area, where housing demand exceeds supply and competition for properties is fierce, homes frequently go under contract the first day on the market, with some buyers offering to pay tens of thousands over asking. Others pay cash or agree to foot the bill for needed repairs discovered during inspections.

Those factors have helped push home prices in the region to record levels. According to Illinois Realtors, the median price of a home in the nine-county Chicago metro area reached $390,000 in April, up 5.4% from $370,000 the previous year.

At the same time, the number of homes on the market fell 10.6%, from 13,131 in April 2025 to 11,737 this April.

Sellers “are pretty much able to name their price,” said Connors, owner of GetBurbed in Arlington Heights, adding “buyers are accommodating sellers' needs and demands.”

“I don't anticipate inventory loosening,” she added, “but I do anticipate buyers getting more frugal with their cash.”

When it comes to waiving appraisal contingencies and covering repairs, “I suspect buyers are going to run out of cash to cover those deficiencies,” she said.

With some houses selling for more than their appraisal, buyers may have to scramble to make up the difference between the price and the loan amount a lender will provide, said Rich Eisenhuth, senior loan officer with HomeTrust Mortgage Corp. in Schaumburg.

“At that point I have to be neutral,” said the self-described “numbers guy,” who has spent 35 years in the mortgage business.

Eisenhuth reminds buyers that no one can predict the future or guarantee a property’s value will appreciate over a specific period of time. He also cautions prospective homeowners about unexpected expenses.

“Every now and then you look up, and there's a drip from the roof,” he said

Nancy Eisele, an agent with Coldwell Banker Realty in Schaumburg, said high interest rates — averaging about 6.5% for a 30-year fixed loan — are causing homeowners to carefully consider whether they really want to move.

“Sellers are hesitant to sell if they still have a loan on their property and intend to have one on the property they purchase,” Eisele said.

Steve Gregor, an agent with Core Realty in Deerfield, agrees that interest rates may be limiting the housing supply.

“A lot of people might want to sell, but they don't want to give up their current interest rate of 3-3.5%,” he said. “If rates were to drop, fence sitters would get off the fence.”

There was a time when if an offer was rejected or a deal fell through, a buyer could be certain of finding another house fairly soon. That's not necessarily the case today.

“Buying a house is a process,” Eisele said, for which experienced agents provide invaluable assistance as well as alternate strategies.

Gregor recalled a couple who repeatedly lost bidding wars over the six months they searched for their dream home. In one case, they offered $100,000 over the listing price but were rejected in favor of a buyer who offered cash.

The competition means buyers may have to take aggressive measures like adding an escalation clause — which Gregor called “a kind of trump card.” The clause automatically increases the buyer's bid to a set amount if competing offers top their initial tender. Other options include a quick closing and renting the home back to the sellers for a period of time.

Eisenhuth advises buyers to find professionals they feel comfortable with and trust. He also advises them to connect with an experienced mortgage professional who may offer strategies on how to pay down debt and improve their credit score, which can impact their rates and the amount for which they can be pre-approved.

“Start as early as possible so you're in tiptop shape,” he said.

After spending several months looking, Connors found the Heinrichs a home in Elk Grove Village. They viewed the house at 9 a.m., before an open house. Within hours they’d made an offer and the seller accepted.

They got a contract for their Hoffman Estates home on the same day, for which Dustin Heinrichs credits “a little Holly magic.”

They moved in two weeks ago.

Potential buyers have other things to consider. For instance, today's buyers don't necessarily purchase a home intending to live in it for 30 years, according to Connors. On average, owners remain in their home about seven years.

“People are valuing happiness as opposed to long-term commitments,” she said. “People are paying more than they anticipated because they want to get into the market, because they're chasing happiness.”