BUFFALO, N.Y. -- The Buffalo housing market is hot right now. The average home is now selling for $120,000 in Buffalo. The average rent is $739 a month.

Both of those have jumped significantly in past years. And soon, some downtown penthouse apartments will be going for anywhere from $3,000 to $5,000 a month.

"Everything is the best of the best as you can see from the lobby. Nothing has been spared," says Anthony Kissling.

Kissling showed us 298 Main Street on Monday. Built in the early 1900s, and most recently home to a law firm until a few years ago, it will soon be transformed into 26 high-end apartments.

"We have just vacant floors. We've demolished everything on the floors," he added.

Each floor will be divided into six apartments with rents expected to range from $1,800 to $3,000 a month depending on the size and finishes. These will be work-live lofts, and Kissling already has experience with similar projects in Western New York.

"We have companies from New York City, Brooklyn, Canada, Albany that have little small offices here. People work, attorneys live there, and they work out of their house. We expect to get a lot of people like that here," says Kissling.

The building will also have valet parking, and someone staffing the concierge desk 16 hours a day, seven days a week. Two of the lofts will be penthouse apartments with spectacular views and private rooftop patios. They are expected to command rents of anywhere from $3,000 to $5,000 a month.

And renters aren't the only ones now willing to pay higher prices to live in Buffalo. Matt Quagliano has been selling real estate in Buffalo for 26 years.

"I sold it to them for 66,000 in 1997. And it just closed. We got 206 for it this time," says Quagliano.

He says the owners of a home on Crestwood in North Buffalo never thought they would get that much for their home.

"It's really a win-win for the seller and the buyer. The prices are at an all-time high. Things are really scarce in terms of availability, and you can still get into a property like this as the buyer, collect a rent or two, and live for a fraction of a cost of what it would be per month to rent it,” says Quagliano. "Very rarely is there a house that's prices right that's a decent house on the market more than a week now."

So what's driving this? Quagliano says there are fewer homes on the market now because people have refinanced at low rates and they're staying put. He says that's helping drive up home prices due to the small supply. He also says people are starting families later in life and couples have more disposable income to pay rent or buy a house.