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April 1, 2024

State of the 3+ Unit TIC Market: March 2024

Building on Dolores

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.

Both Covid and higher interest rates have softened the condo market, and in turn, the market for TICs in buildings with three or more units. (I view TICs in two-unit buildings as a different animal, as condo conversion is typically more straightforward and possible under certain owner occupancy conditions. They’re closer in value to condos than that of their 3+ unit building TIC counterparts.)

A total of 95 TICs sold in 3+-unit buildings over the past six months at a median price of $899,500. As a comparison point, 797 condos changed hands during the same timeframe, for a median price of $1.1M. In general, I’m seeing this type of TIC sell for 20% less than condos, and these median prices bear that out.

TICs sold most frequently in these popular neighborhoods where condos are much more expensive: Noe/Eureka Valleys, Mission, Mission Dolores, the Haight, Lake Street, Nob Hill and NoPa.

TICs closed for under or at their list prices, with a handful of exceptions. For example, a pair of nicely remodeled Noe Valley one-bedroom TICs with in-unit laundry and parking at Noe and 21st Street listed for $550,000 and $599,000 sold in the $700,000s. And a two-bedroom unit with parking in a desirable Telegraph Hill location asking $995,000 closed escrow for $1,260,000. As always, location counts for a lot when it comes to TICs.

Only six TICs sold for $1.5M or more, with the most expensive being the large 3BR/2.5BA home in a nine-unit historical building at 1830 Jackson #B in Pacific Heights. The renovated unit with perks like radiant heating, audio system, wide-plank floors and parking sold for $2,550,000.

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

Here’s a quick look at how the one-, two- and three-bedroom TIC markets performed over the past six months:

# sold: 25
Median price: $720,000
Avge days on market (DOM): 43

# sold: 45
Median price: $890,000
Avge DOM: 51

# sold: 21
Median price: $1,225,000
Avge DOM: 51

TIC loans are done through fractional financing, most of which are adjustable-rate loans (ARMs).  Interest rates are currently in the 6% – 7% range for an 80% loan to value.  There’s a healthy number of lenders doing TIC loans, such as NCB, Meriwest, Bank of Marin, Bank of San Francisco, Redwood and Patelco Credit Unions. There are 30-year fixed TIC loans available, but your best bet is likely an ARM given where rates are—particularly if you’re not planning to live in the unit for the long haul.

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 is reportedly returning this year—or in 2025 or 2026, depending on what level of conversion backlog the city has. There will also be more restrictions on converting. If you’d like up-to-the-minute advice on TIC matters, I highly recommend firms like Goldstein Gellman or Paul Law Group.

[All data pulled from the San Francisco Multiple Listing Service for TICs in 3+-unit buildings sold from October 2023-March 2024.]




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