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October 26, 2023

State of the TIC Market: October 2023

Albion TIC Building Mission

The tenancy-in-common (TIC) market continues to represent a small slice of properties sold in San Francisco. But TICs are an important property category in the city because they can put first-time home buyers on a path to get more space in a better location than a condo will allow.

The TIC market has its challenges these days against the backdrop of a softer condo market. Condos are typically buyers’ first choices because you can own them independently and not be on title with multiple owners. So TIC activity is currently sluggish as buyers take advantage of condo deals throughtout the city.

A total of 134 TICs sold from April-September 2023 at a median price of $916,250. (945 condos changed hands during the same timeframe). Buyers gravitated to TICs in larger buildings with five or more units, which had a median price of $800,000. TICs in smaller, two- to four-unit properties commanded a higher median price of $1.2M.

TICs sold most frequently in these popular neighborhoods where condos are much more expensive: Noe, Eureka and Cole Valleys, Bernal Heights, Mission, Inner Sunset, Pacific Heights and Telegraph Hill.

Sales were just under or at their list prices, with only two units selling with substantial overbids of 17% and 30%.

14 TICs sold for $2M or more, with the most expensive being 3500 Broderick in the Marina. The completely renovated, two-level 3BR/3.5BA, 2500-square foot home in a two-unit building featured nice touches like lime wash walls and blackened steel/glass accents, and was half a block from Chestnut Street. Buyers paid $3.5M in cash for this property.

But the sweet spot for TIC buyers is the $1M or under segment; more than half of all TIC sales fell into this price range.

TIC loans are done through fractional financing with adjustable-rate loans, and interest rates are hovering around 7% at the moment. There are asset requirements and an origination fee, as well as maximum loan amounts. Lenders frequently doing TIC loans in San Francisco are NCB, Meriwest, Bank of Marin, Bank of San Francisco, Redwood and Patelco Credit Unions.

It’s safe to say at this point in time that buyers aren’t purchasing TICs in buildings with three or more units with the goal of condo converting. Those efforts have been thwarted over the past decade with the condo conversion lottery suspension. The lottery will return in the future, though condo conversion ability will be significantly restricted. For now, most buyers simply view TICs as a way to get into a nice home in a good location and are willing to assume the risk of having all building owners on title.





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