I often refer to TIC shares as the red-headed step children of San Francisco real estate. Which probably sounds harsh, but I’ve seen too many buyers equate tenancy-in-common (TIC) shares as being “just like” or “almost like” condos, which they really, really aren’t.
Which isn’t to say that there aren’t a few situations where purchasing a TIC share makes sense. Just like any other investment, you need to make sure you understand what you are purchasing, what the risks currently are, what the future risks could be, and how those risks may impact the value of your investment.
TICs – as a general rule – are the least desired property type in San Francisco. If the exact same property were theoretically available as a condo or a TIC, it would always make more sense to purchase the condo version. But, this being real estate, no such equivalency exists other than in the realm of the hypothetical.
How are TIC shares doing?
As you can see from the above chart, TIC sales in February of 2013 are up about 12%, year over year. Just as interesting as the increase in transaction is the increase in price:
Fast forward a year, and the median list price for a TIC share has increased from $584,000 to $589,000, and the median sales price for a TIC share is up from $574,000 to $593,000. So not only are prices up, but even TIC shares are going for more than the asking price in our current market. Which is a remarkable change from even one year ago.
What are your thoughts about tenancies-in-common and the current SF real estate market?