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Investing in Real Estate

Tips For Investing In Real Estate Right Now 

Now that the Covid-19 pandemic is beginning to slow down a little, many are beginning to take on new business endeavors. Real Estate investments have been on the rise within the past year, especially among first-time investors. So what should you know as you enter into your investments in 2021?

Many experts believe that first-timers should always find a mentor who they can trust to guide them in their initial investments.  Realty ONE’s CEO Kuba Jewgieniew, explained how now that more individuals are opting to stay home for work, looking at trends in the market has never been more important. 

“With fewer people returning to a physical office and many more people reevaluating their life choices, we’re seeing a resurgence in cities like Phoenix, Arizona, our headquarters’ home of Las Vegas, Nevada, and even once-less-popular markets like Boise, Idaho,” Jewgieniew explained. 

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“As more people move to these metros but also out to the suburbs to get a bigger space for less money, we’ll see even these areas become more popular, driving home prices higher.”

“An area with higher property values has the potential the yield a more lucrative real estate investment. So pay attention to on-the-rise hotspots—that can be a certain city or even a specific neighborhood—when deciding where to invest,” Jewgieniew explained.

Apartment buildings and boutique hotels have been predicted to receive a slew of investments in the coming fiscal year as well, which Jewgieniew thinks will lead to a larger presence of tech giants in our communities:

“I anticipate that retailers like Amazon will buy up these malls and convert them into distribution centers, creating jobs near the former malls. I believe that a lot of these apartments near the malls are going to get converted into condos to accommodate the workforce.”

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Jewgieniew explained that it’s important to build an organized business plan before making any official decisions as well.

“It’s not just about how much money you have and what income the building creates; you’ll need to factor external factors such as interest rates, vacancy rates, and occupancy rates into the equation too.”

Finally, Jewgieniew urged first-time investors especially to not get too excited by the thrill of investing in a new property, and take their time when it comes to reading all the fine lines. 

“A year ago, I would have said something different, but do not try to get in and get out quickly. Buy it, hold it long term, and focus on cash flow. Competition for these properties is intense right now, so you may have to pay a little more than you should to acquire one—and since construction materials are also extra expensive, it’ll be harder to turn a profit.”

Overall, just be smart with your money and make sure you’re making investments that will benefit you in the future. “If you’ve got a business plan in place and have a network of resources, like a knowledgeable real estate pro, then now could be a good time to invest in a flip property.”

International Buyers Looking At US Housing More Than One Year After Pandemic Began 

During the first year of the Covid-19 pandemic, the US saw a major increase in domestic real estate transactions. International buyers took the opposite approach and avoided investing in any US properties while the pandemic continued due to the uncertainty of the world’s economy.

Sales of US homes to foreign buyers fell by about 31% from April 2020 to March 2021, according to the National Association of Realtors. 

International buyers purchased around 107,000 properties during that time, which marks the lowest unit volume and lowest dollar volume since 2011, according to NAR. 

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“The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions.”

“Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly,” said Lawrence Yun, NAR’s chief economist.

China, Canada, India, Mexico, and the United Kingdom are typically the top five countries continuously investing in US property. The amount of money brought in this past year, however, was down by at least 50% for buyers from China, Canada, and Mexico. The UK was the only nation that actually saw an increase in investment this year. 

Normally, China takes the lead in terms of the most amount of US property purchased throughout a given year, however, those transactions decreased significantly during the Trump administration. Now, China buyers have been inquiring more and more. 

“There has been quite a positive impact on the demand from the Biden boost, as the U.S. is being perceived as much more predictable now, and visas are also much easier to be obtained.”

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Georg Chmiel, executive chairman of Juwai IQI, a home listing site in China claimed that “on the other side, and now that we are over a year dealing with the Covid pandemic, it has lessened the impact on the buying decisions because flights to the U.S. are possible.”

Home prices are now 15% higher than they were pre-pandemic in the US; which makes sense considering the economic impact the nation has been enduring. Chimel stated that these rising prices, however, create a new demand for international buyers who may be afraid that they’re missing out on prime investment opportunities.”

Additionally, homes in the US are much less expensive than homes in places like London or Hong Kong, where a lot of buyers inquire about US property. The number of virtual tours on almost all major real estate sites in the US have increased exponentially. 

“So if that’s an indication of the comfort, then certainly this has increased, because people are now used to do far more things online shopping, education, also working from home online, and that also had an impact on the property market,” said Chmiel.

“As travel restrictions loosen and foreign students return to U.S. colleges in the upcoming year, there is likely to be some growth in foreign buying of U.S. real estate. High home prices and the ongoing lack of inventory could, however, pose a challenge for buyers,” Yun said.

How To Avoid Cyber Criminals In Real Estate 

Now that we’re heading towards the end of the Covid-19 pandemic, the real estate industry has been able to thrive thanks to an influx in prospective buyers who are ready for a change of scenery. Real estate wire transfer scams and crimes also tend to rise when the market is doing well due to the amount of transactions occurring, so how can we avoid them? 

Wire fraud typically occurs in the real estate industry when a scammer poses as a trusted source, like a vendor, company, or family member. These individuals always request an immediate wire transfer of funds, and often make up some sort of emergency as a way to emotionally manipulate the victims out of the money. 

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According to the American Land Title Association, more than 11,600 individuals were victims of real estate wire transfer fraud in 2019. Experts claim that number has increased exponentially throughout the pandemic, and it likely will continue to get worse. 

These hackers aren’t your typical trolls who try to get you to click a link so they can access all your personal information. They follow the entire real estate process from start to finish, posing as fake real estate agents and figure heads to get their victims to feel safe in their transactions. 

These hackers are able to acquire the money once they deceitfully reroute the closing instructions for the wire transfer. At the end of the transfer, where a certified check would typically appear to make sure the transaction is legitimate, these hackers instead just complete the exchange and take the money. 

These sort of crimes have been on the rise in the past year due to the amount of real estate transactions that have now been occurring online. It’s becoming harder and harder for buyers to determine who’s a trusted agent and who could potentially scam them. 

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According to ABC News, some of the best things you can do as a prospective buyer, when it comes to determining the legitimacy of your transaction, is “read and double-check everything carefully. Always forward emails, never reply. Remember, a title company will never create urgency or urge you to move quickly.”

“Verbally verify everything through a phone number you recognize. Change your passwords regularly, never email financial information, and always report suspicious activity.”

Michael McKenna, the president and co-founder of Weichert McKenna & Vane, spoke to the media recently about what he tells his clients to look out for in order to protect themselves and their money: 

“You really want to focus on validating the wire instructions with a phone call and verifying the phone numbers and verifying the wiring information, the account numbers that you are sending and receiving monies to and from. That verification on the phone, understanding that you are talking to a voice that you’ve probably spoken to before and you trust in that voice, is very critical.”

Facebook Is Entering Into The World Of Real Estate 

Facebook is currently planning to develop a community near its headquarters in Menlo Park, California. The property is set to have a supermarket, restaurants, shops, and a 193-room hotel. 

The company town will be known as Willow Village, and will contain over 1,700 apartments on site, including 320 more affordable units and 120 that will be set aside specifically for senior citizens. 

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Willow Village is being developed on a 59-acre site which currently stands as an industrial and research complex. Facebook is collaborating with Signature Development Group to create the space; the group is a Bay Area real estate developer known for creating spaces that combine commercial and residential spaces. 

The design for Willow Village is projected to be very community oriented and pedestrian friendly. It will have numerous bike trails, sidewalk space, and numerous public park spaces; including a quarter-mile elevated park meant to emulate the High Line in Manhattan, NYC.

The development will also contain a 1.25-million-square-foot office building that will include a massive glass-dome area known as the “collaboration area.” 

Facebook initially filed paperwork to redevelop the 59-acre site back in 2017, but were met with major resistance from residents in nearby neighborhoods who were worried about the traffic and housing prices that would be impacted. 

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In order to accommodate, Facebook created a blueprint that made Willow Village have 30% less office space to make room for 200 more apartments. It also agreed to prioritize construction of grocery stores and other retail options that any citizen can use, not just employees. 

“We’re deeply committed to being a good neighbor in Menlo Park. We listened to a wide range of feedback and the updated plan directly responds to community input,” said John Tenanes, Facebook’s VP of real estate.

Willow Village will not just be for Facebook employees. The City of Menlo Park is still currently reviewing Facebook’s proposal that would allow for prime residential access to the spaces in Willow Village, but it’s expected that the proposal will be approved in the coming weeks. 

The goal is to have as many Facebook employees as possible living in the village to allow for optimal business. The public aspect will also help the social media giant further grow because they now will have direct access to the individuals who use the platform every day. 

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How Much Has The US Housing Market Been Impacted By The Pandemic? 

Housing experts throughout the US are currently experiencing a “white hot” market thanks to a multitude of economic reasons. However, problems that existed in the industry before the pandemic are being just as exasperated due to the impact of the past year overall. 

“One of the most prominent housing issues in pre-pandemic America was supply shortages. That has carried over and exacerbated, but we already had evidence of supply shortages heading into the pandemic,” said Matthew Murphy, executive director of the Furman Center For Real Estate and Urban Policy at New York University. 

Murphy also explained that “today’s housing situation has its roots in the last boom-bust cycle. The context here to this current housing moment is that we were still recovering from the 2009 foreclosure crisis, when property values plummeted.” 

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According to the National Association of Realtors (NAR), over the past two decades an underbuilding gap of between 5.5 million and 6.8 million housing units has existed since 2001. 

The National Association of Home Builders found that of “all the new single-family homes built last year across the U.S., none were priced below $100,000. A mere 1 percent fell in the range of $100,000 to $150,000. Home buyers in the bottom one-fourth of the market have been squeezed entirely out of the market for new construction,” the group said in an online post.

“In a pandemic, with people working from home and kids schooling from home, you need more space. We saw a real pickup in demand. People wanted a home with some green space and a community with lower population density.”

“The increase in demand has really been sparked by the record low level of mortgage rates. That’s a real opportunity for anyone who’s shopping for a mortgage or shopping to buy a home, and that’s really sparked the demand, especially among millennials or Gen Xers,” explained Frank Nothaft, chief economist at CoreLogic. 

Prospective buyers are also noticing a major decrease in available homes due to the fact that those who weren’t as economically stunted by the pandemic have been able to get out and acquire more real estate within the past few months of recovery. 

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“You’ve got this 20-plus percent year-over-year price growth, which you think would entice homeowners to sell. The bigger factor is just availability of supply to move into. … There’s nothing to go buy or downsize into,” said Todd Teta, chief product officer at Attom Data Solutions.

Zillow found a nearly 4% increase in housing availability on the market in May, which has been the first time that percentage has increased since July 2020. The NAR found that the average price of existing homes throughout the US have hit a record number of $350,000; up nearly 25% when compared to last year. 

“This is supply and demand on steroids.”

The other major issue is that builders, architects, and construction workers can’t keep up with the demand that the pandemic has created. Costs for certain raw materials like copper or lumber are projected to continuously increase within the next couple of months. That in addition to labor costs and the cost of land overall is causing a lot of buyers to be hesitant with their purchases. 

“There’s an affordability that comes with density, and in a lot of America, you can’t build that kind of housing. This just makes it harder for the market to supply this housing en masse,” Murphy explained. 

“If we see a substantial increase in the proportion of the workforce working remotely, then I think we’re going to continue to see some of this shift to single-family and this shift not just to suburban but to the outer edges of metro areas. When you sever that link between where you live and where you work, then that gives you a lot of flexibility on where you locate,”  Nothaft said.

Florida Residents Complained About Champlain Towers Development Two Years Before Collapse

Two and a half years before the Champlain Towers South building collapsed in Florida, residents were complaining that the buildings were being developed too closely together and didn’t seem safe. 

“We are concerned that the construction next to Surfside is too close. Workers were digging too close to our property and we have concerns regarding the structure of our building. There’s construction equipment directly across from our building’s property wall,” resident Mara Chouela, who is also a board member of the condo association, wrote in a January 2019 email to a building official.

Rosendo Prieto was the official responsible for sorting through complaints made by the condo association at the time. 30 minutes after Chouela sent the initial email, Prieto responded that there was nothing that needed to be checked. He reasoned that “the offending development, an ultra-luxury tower known as Eighty Seven Park, was directly across the border separating the town of Surfside from the city of Miami Beach, which runs between the two buildings. 

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Now, after the Champlain Towers South collapse, Eighty Seven Park is facing even more scrutiny over the construction of these buildings. In fact, Champlain residents often complained that all the construction from the neighboring buildings continuously caused their units to shake.

“The construction of 87 Park did not cause or contribute to the collapse that took place in Surfside. But the 18-story tower would not have been allowed to be built across the border in Surfside, where buildings are subject to a 12-story height limit (although Champlain Towers itself received an exemption in the 1980s to add nine extra feet),” The Wall Street Journal reported Monday.

Maggie Ramsey is a Florida resident whose mother is among the unaccounted for Champlain residents, and she claims her mother had been concerned about the work being done next door for weeks now. 

“She did complain of a lot of tremors and things that were being done to the other building that she sometimes was concerned about what may be happening to her building, and if she was at risk.” 

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Peter Dyga, the president and CEO of Associated Builders and Contractors, said that “the likelihood of the Eighty Seven Park construction being a significant cause in the Surfside collapse is slim, but no lead or idea should be excluded.”

“There’s probably going to be multiple things in the end that have contributed in some way or another. Still, buildings are built next to buildings all the time, and it doesn’t mean that they come down.”

Records also show that Champlain South residents have sent a series of angry emails to Terra Group, the developers behind Eighty Seven Park, complaining about construction debris, noise, and lack of action. 

“I am shocked and disappointed to see the lack of consideration and respect that Terra has shown our residents. You have said you want to be a good neighbor… This is truly outrageous and quite unprecedented from what we hear from other associations in the area that have dealt with construction beside them,” Anette Goldstein, a condo board member, wrote to executives with the developer. 

What Homebuyers Are Looking For In A House Post-Pandemic

Now that more Americans are getting vaccinated and starting to resume their normal lives, many are looking to move around the country for a truly fresh start. However, we aren’t fully out of the woods when it comes to Covid-19, so many prospective buyers are changing their requirements for what’s needed in a future home to accommodate their post-pandemic lifestyles. 

One survey from realtor.com showed that extra space for extended family, pets, and home offices has been top priority for most buyers, it’s also one of the reasons the housing market is on the rise in the US right now. 

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Realtor.com’s survey also showed that terms like fenced yard, acres, backyard, front porch, garage, and three-car garage, have been some of the most searched for requirements from buyers in the past year. 

“The COVID pandemic ushered in a new way of thinking about what home means, and that is influencing much of what today’s home shoppers are looking for.”

George Raitu, realtor.com®’s senior economist claimed that: “Garages, large backyards, and space for pets always rank high on buyers’ wish lists, but those features have grown in importance. The survey results highlight that the pandemic has elevated our relationship with family as well as the need for our home to serve multiple purposes, especially the ability to work remotely. As a result, we are placing a premium on the need to accommodate extended family, and features like a home office and broadband internet.”

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The following 10 features have become the most prioritized requirements from buyers according to the survey (in order from most to least): quiet location, updated kitchen, garage, large backyard, outdoor living area, space for pets, updated bathrooms, home office, broadband internet, and an open floor plan.

65% of buyers claimed that they were considering their extended family when it came to shopping for a new home, and nearly 25% stated that they planned to move closer to family. 20% have claimed that they will be having extended family living with them full-time while 30% said their new home would need to accommodate for guest visits. 

“Remodeled homes dropped 88% year-to-date through May. It appears that motivated buyers are making concessions in their home search as home prices rise. Fewer searches are occurring for otherwise popular features such as granite countertops (down 58%), theater/media rooms (down 65%), and bars (down 52%),”  the report notes.

The housing market in America is currently on the rise, with most states reporting that homes aren’t staying on the market for more than a couple of weeks due to the increased demand for relocation among American citizens.

Hidden Costs That All US Homebuyers Should Be On The Look Out For This Year

According to market reports, almost half of all US homes on the market are currently selling within a week of being listed, and prices are continuing to climb in almost every part of the country. 

Many buyers, especially first-time buyers, need to be aware, however, of the multitude of costs that can build up during the final discussions of finalizing a home purchase. Experts claim that all prospective homebuyers should have a separate fund on hand specifically for closing costs. 

These costs typically include things like appraisal fees, property taxes, real estate agent commissions, homeowner’s insurance, title insurance, and more. Jessica Menton, a personal finance and markets reporter, recently discussed the best ways homeowners can plan for their future when it comes to looking for a home. 

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“Generally financial planners say that you should expect to pay somewhere between 3% and 5% of what your mortgage account is, give or take. So for a $300,000 mortgage that means setting aside $9000 to $15,000 for closing costs.”

Bill Gassett, a real estate agent in Massachusetts, stated that when you take out a mortgage, your lender will provide a document that details all of the closing costs involved in the property you’re interested in. Gassett recommends reading this document very carefully, because in some cases a buyer can ask the seller to cover some of the items listed. 

Menton claimed that usually most sellers will pay about 5% of the total sale price in real estate agent fees, commissions, and other expenses, and with most homes now selling well over their asking price, it’s likely more sellers will be less willing to budge on these listed fees. 

“I do sometimes recommend buyers hire an independent inspector, even though sellers will hire one to look for major issues, it can give buyers that extra security.” 

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“When making an offer, buyers typically submit 1% to 5% of the home’s value in earnest so the seller feels comfortable pulling the home off the market. That fee is usually held in escrow and applied to closing costs,” Menton says.

Gassett also warned that if you’re buying a home that’s a part of any sort of association, you need to get details in the beginning about special assessments that will appear down the line of owning the property. 

“Most people know that there’s a condo fee or an HOA fee, but they may not notice a special assessment coming up, where all of the sudden there’s a big extra expense. As part of closing, lenders get the home’s value appraised, because home prices are rising so fast, the difference between asking price and appraised value can now reach into the tens of thousands.That difference can put ardent buyers in a conundrum,” Gassett explained.

“The bank’s not going to do the loan unless the buyer puts more money down, so a lot of buyers are being forced to actually bring more money to the table than they thought they needed.”

Menton also suggests buyers hire a lawyer to get them through the closing period if they’re really nervous about additional costs. Don’t be afraid to pay an expert for their services so that you know the place you’re going to be living won’t end up costing thousands of more dollars than you expected. 

Americans Are Flocking To Florida To Embrace Post-Pandemic Life

Florida has become one of the hottest travel destinations in the past few months as more Americans are receiving their Covid-19 vaccinations and ready to get back to a greater sense of normalcy. 

Beyond just vacationing, many Americans are looking to invest in real estate in Florida, specifically in Miami where social outings have been occurring constantly since the beginning of the year. 

Antonio Khoury is the Managing Director at Compass & principal of the Antonio Khoury Group. He recently was interviewed by Forbes Magazine to discuss this recent influx in Miami investments and travel to Florida in general. 

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The Antonio Khoury Group has been working for over a decade and has seen over $500 million in sales. Khoury said many individuals from Boston and New York have been adding Florida homes as a part of their dream real estate portfolios in this post-pandemic era that we’re all entering. 

 “We made an immediate expansion to the Miami market knowing that we could leverage our strategic alliances within Compass to best serve the needs of Northeast clients looking to purchase a home in the region. My real estate group has facilitated over $20M+ in successful closings in Florida in the past few months,” said Khoury. 

“The mass exodus during COVID-19 to South Florida, was certainly evident. I would argue that COVID-19 expedited plans of owning real estate in a warmer climate.”

Most of the new clientele in Florida, however, is made up of individuals who found themselves on the luckier end of the spectrum in terms of economic and social impact of the pandemic. 

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“The second largest contingency of buyers in the South Florida market are those who have benefited from their companies remaining virtual or have adapted to long term flexible work structures, i.e. young professionals from Boston and New York. These buyers have found the Miami market a much more attractive home base due to its perks. Things like more accessible luxury rental prices, more accessible luxury condo prices, private outdoor space, the warm climate, all the while in the same time zone as both Boston and New York are attracting these young professionals,” Khoury explained. 

Khoury is adamant that any prospective buyers for Florida real estate need to do their research before making any final decisions, especially if they’re looking into Miami. 

“Miami has many distinct neighborhoods, which are set for different lifestyles and personalities. Brickell, for example, is the area with the most high-rise full service residential buildings, offices, restaurants, and nightlife. Given the overall full-service aspect of the neighborhood, it has become the go to area for those seeking pied-a-terres.” 

Khoury recommends that any buyer who’s looking to invest in Miami for a second property should simply vacation there first to make sure that its really worth putting their money into. America is still very much in the middle of combatting this pandemic, so it’s important to remember that the market and social settings in all of these locations will change drastically in the coming months.

New Home Sales In The US Fell 6% Last Month As Construction Costs Continue To Rise 

The US experienced a 6% fall in home sales throughout the month of April, partially due to the fact that construction and other additional costs that come with buying a home have been on the rise as the pandemic continues. 

The US Census Bureau reported on Tuesday that new residential sales occurred at a seasonally-adjusted annual rate of 863,000 in April. They also reported that the previously published figures for March sales should be decreased to 917,000. This time last year during the pandemic, new home sales were surprisingly up by 48% due to an increase in individuals leaving the city to have more space in the suburbs. 

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The Bureau also noted that new home sales reports are prone to change within the first month of release as well, and they predict that the new home sales between March and April could be 11.2% larger or smaller than what it is currently. 

Sales rates in every part of the country have decreased except for the West, where sales grew by 3.9%; the largest decline occurred in the Northeast with a nearly 14% drop. The inventory of new homes available for sale at the end of April was also significantly lower from March. 

Pantheon Macroeconomics chief economist Ian Shepherdson had “projected a larger decline than what occurred, because of trends in mortgage application data. Over time, though — and usually not much time — new home sales gravitate to the pace implied by the trend in mortgage applications. So, absent any other reliable near-time indicators of the pace of sales, we have to expect a steep drop in April.”

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Experts believe that the decline in mortgage demand is linked to an increase in property costs, as well as construction and renovation costs. Affordability is obviously a top priority for every working class American right now as we navigate this grey area of the pandemic where half of people are receiving vaccines while the other is refusing. 

“The market for new homes is seeing price pressures not just due to the high demand for housing but also because of rising material costs that are driving construction expenses higher.”

“Builders are reluctant to sign sales contracts for houses they haven’t broken ground on because of the possibility that costs will continue to rise, nibbling into profits. So some builders are waiting at least until houses are framed before accepting buyers’ offers. This limits the number of home sales, even as demand remains strong,” ,” said Holden Lewis, housing and mortgage expert at personal-finance website NerdWallet. “

“The market for new homes has benefitted from a near-record low supply of available resale properties, which is sending prices skyward,” said Sal Guatieri, senior economist at BMO Capital Markets.