A total of 67 TIC interests sold in the January-March timeframe, at an average of $576,140. All but a handful were located within 3+ unit buildings. The least expensive was a standalone garden cottage on 7th Avenue in the Richmond, which sold for $250,000, and the most expensive was a 2BR/2BA TIC in a six-unit building in Cow Hollow. Hayes Valley, the Lake district, and Russian Hill led the way in sales volume.
The average price in Q1 2009 for the 49 TIC interests sold was $710,582. Prices have definitely come down since then.
There are currently 73 TICs in contract—a healthy number that bodes well for the next quarter’s sales. But 189 TIC interests are on the market right now. But with 702 condos also competing for buyers’ attention, it seems to me that the TIC market will slow down a bit in the Spring. I believe the Spring will bring out many new buyers—I’m getting referrals on a daily basis for new buyers aiming to make a purchase in the next three months—and most would rather take advantage of the lower condo prices than get involved in more complex ownership scenarios.
I think the TIC market has decreased in risk with the advent of fractional financing. However, the open question is how long fractional loans will be available, which may or may not bode well for those who own properties through this method of financing. Resale prospects are limited for TICs with fractional financing, as the pool of buyers that can qualify and afford fractional loan program is small.
If you find yourself considering a TIC purchase, please do yourself a favor and have an attorney review the TIC agreement and other critical documents before you remove your document review contingency. Work with your agent to investigate all the details so you know what to expect going in to the purchase. The bottom line is that TICs can work well for buyers who are looking to get into the more popular neighborhoods where condo prices have escalated. But it’s still important to do your due diligence at all turns.