What’s the difference between a condo, a TIC, and a co-op? No doubt you’ve heard of each of them but if you are like most people, you’re not sure about the specifics.
Generally speaking, if you are looking to buy a place to live in San Francisco (and it’s not a single family house) then you are probably talking about one of these three forms of ownership. Since these are forms of ownership and not styles of construction, you can’t tell these buildings apart by physically looking at them. Here are the primary differences in how they each work:
A condo is the most common form of ownership. When you buy a condo, you own one particular unit in a building. You’ll have title to the unit plus you have rights to a use the common areas. In a condo, you’ll pay a monthly homeowners association fee, and you’ll need to abide by rules & regulations (called CC&Rs). Condos can be financed with conventional mortgages (think 30 year fixed rate loans issued by major banks). Most banks that issue mortgages will loan on a condo as long as it meets their underwriting criteria.
A tenancy-in-common (aka. TIC) is a hybrid form of ownership where you own a percentage of a multi-unit building. TICs came about as a way for people to be able to band together to buy property relatively affordably in otherwise expensive cities. As a TIC buyer, you’ll have rights to live in one unit in the building. Just like a condo, you pay a monthly fee and can use the common areas. In a TIC, the rules and regulations of ownership are spelled out in a TIC agreement. Major banks do not loan on TICs (because there is no secondary market where they can sell the loans to other banks). Financing is therefore more expensive and less attractive than condos. There are a few smaller banks around the Bay Area that offer TIC loans. They charge a 1% fee up front to write the loan, and the interest rate is often about 1% higher than a conventional condo loan, and the rate is locked for no more than 7 years (compared with 30 years for condos). Down payment requirements are higher than for condos, often 25-30%. Although TIC owners each have their own mortgage, this form of ownership does come with some additional risk, primarily surrounding payment of property taxes and potential default by a co-owner. The TIC agreement does address the risk to some degree however buyers should be fully aware of the details before buying a TIC. The upside is that the purchase price for a TIC is almost always considerably less expensive than a comparable condo.
A co-op (aka. cooperative) is a building owned by a private corporation. It is basically an elite gated community. When you buy in to a co-op, you are purchasing shares in the corporation. You’ll pay a rather hefty monthly fee for rights to live in one unit. Buyers must first be interviewed by the board of directors (ie. other owners) for approval. The interview process generally requires buyers to provide personal financial details for review. The board may accept or reject buyers for any reason. Like TIC financing, terms for co-op financing are less attractive than conventional condo financing and the number of banks that will issue loans are limited. Co-op buildings tend to be well maintained (because they usually have substantial amounts of cash in the bank). Co-ops do not allow rentals, so purchasing one as an investment property is not an option. Like condos and TICs, co-ops may have shared common areas as well as rules and regulations governing what owners can and cannot do.
This is just a quick summary of the differences in these forms of ownership. I’ve sold all of these types of properties and am happy to discuss the specifics with you. You can find me anytime at 415-971-5651.
I am often asked about the seasonality of real estate in San Francisco. As it has been for a long time, we are in a seller’s market in SF however there are definitely some fluctuations throughout the year.
Sellers: The majority of the year is still very good for sellers, especially for single family homes, however the best time for sellers is in September/October when the weather is usually sunny and dry and fog is nowhere to be seen. This time of year is known as “San Francisco’s summer” even though it is really autumn everywhere else. Throngs of buyers are visiting lots of open houses on these sunny weekends, multiple offers are the norm, and sale prices that far exceed list prices are very common.
Buyers: If you are buying and want to have a shot at getting a (relative) bargain, you’ll want to do that in July/August or wait until November/December (but the number of available listings will be limited). The number of buyers that you’ll compete with are usually relatively low at this time, and the resulting number of offers and sale prices will also likely be in your favor. Of course, as with most things in San Francisco, each neighborhood and price range has it’s own unique nuances, so please let me know if you need advice on your particular situation.
Did you know that there is a site that allows you to view permits and complaints for all properties in the city? This comes in very handy if you are thinking of purchasing a home (or if you are a nosy neighbor).
Just head to Department of Building Inspection’s website and enter the property address. There you’ll see all permits relating to electrical, plumbing and building as well as the complaints that may be on file for that location.
By any measure, the heat of the San Francisco market in the first half of 2018 has been among the most blistering ever. Probably only 3 or 4 other periods over the past 50 years have seen a comparable intensity of buyer demand with regard to the supply of listing inventory available to purchase. Though all segments performed strongly, the market was particularly ferocious in the lower and middle-price segments of single family homes.
Here are the median price changes for San Francisco houses and condos sold from 1994 to 2018.
You probably have heard about MLS (or Multiple Listing Service). MLS is the central database of all property listings in a city or region. With 10 MLS districts and 89 sub-districts, San Francisco is a small city with a lot going on. It can be confusing to understand the layout of the different districts and the micro neighborhoods/sub-districts within them. To help make sense of it all, here’s a link to the official SFAR MLS district map. Here is a flash version of the same map. You can use the map when you search the MLS database using Compass.com which allows you to see every listing available with every real estate company in the city. Let me know if there’s a property you like and I will get to work for you.
It’s no secret that most open houses in San Francisco occur on weekends, especially on Sunday afternoons. That can be a real challenge for buyers who happen to be out of town for the weekend but still want to check out a property. Tuesday Tour is an open house for brokers and agents; basically it is an opportunity for industry professionals to tour available homes during the week. What many buyers don’t know however is that the public is almost always welcome to these open house events. You can check to see if a particular property is open on Tuesday by asking your agent or broker. Tuesday open house times vary depending on the MLS district where the property is located. Here is a map of the districts. Here is a list of the Tuesday open house times for each district. The subdistricts can get confusing, here is a list of those. The open house times are broken down to “new tour” and “repeat tour”. New tour is for new listings and repeat tour is for properties that have already been open at least once before. A few neighborhoods have broker tour on Wednesdays instead of Tuesdays since it was tough to see all the properties in one day. Those are: Mission Bay, South of Market, Yerba Buena, South Beach. Want to know if a property will be open on Tuesday or Wednesday? Just ask me!
Buying a home or condo in San Francisco can be intimidating for buyers. The prospect of competing with dozens of frenzied buyers for that one special place can take the wind out of your sails pretty quickly. But here is some good news…
Time of year matters
The SF real estate market tends to be slowest in November and December, that can mean better deals for buyers. Less competition and lower prices are more likely during these two months than during the rest of the year. Although inventory is very limited during this notoriously quiet period, some of the listings that are available will be relatively good bargains.
Back on market, high number of days on market, price drops
Beyond time of year, there are some other ways to find potentially good deals. Watch for properties that have recently come back on the market after being in contract. Although it’s important to understand why the contract was cancelled, these situations sometimes indicate that a seller may be frustrated and more flexible on price and terms. Properties that have been on the market a while (with a high number of days on market, over 60 days) often will signal that the seller is open to some negotiating. Keep an eye out for listings with recent price reductions. All of theses are indicators that there may be a window of opportunity for the savvy buyer.
I’m happy to send you my picks of the best deals in the neighborhoods you’re interested in, just let me know.
Home sales activity, representing buyer demand, is one of the most basic market trend indicators. We typically compare the same time period because home sales are seasonal, lower in the winter and summer months and higher in the spring and fall. Over the first four months of 2016, the number of homes sold declined by 13% for single family homes and 10% for condominiums versus the same months in 2015. While this does represent lower demand, reviewing other indicators will provide a better understanding of overall market conditions.
The amount of supply available, how long it takes to sell and at what price, will provide a better indication of market dynamics buyers and sellers can expect. On the supply side, the inventory of available homes for sale remains low, but it has increased compared to last year. Single family home inventory was up slightly in April 2016 versus the prior year to 587 homes. Condominium inventory year-over-year was up by 94 units or 15%. In terms of the time required to sell homes placed on the market, the average in 2016 was 35 days, four days longer than in 2015. A selling time under 60 days is considered short and seller favorable, indicating an active market. Finally, the median home price, which represents market conditions motivating a buyer and seller to agree upon a sale price, surpassed or equaled its twelve month high in April 2016.
Over the last four years, the San Francisco real estate market can easily be referred to as frenzied. The result has been a huge surge in home prices. Recent data though seems to indicate that the trend may be shifting.
Prices over the last three years appreciated by a whopping 35.02%, but looking at a year-over-year analysis, we can see that the vast majority of the gain, almost 31%, happened between 2013 and 2015. Over the last twelve months, the rate of appreciation has slowed to just 3.80%.
Condos & Single Family Homes Median Sale Price
2013 – 2016 / Year Over Year
It’s also interesting to note that most of 2013 – 2015 saw a steady smooth upward price trend but the last twelve months was filled with multiple peaks and valleys.
The underlying market dynamics haven’t really changed. Demand is high, inventory remains low, interest rates are stable, and financing is no easier or harder to secure then it was a year ago. Of course many other factors impact the housing market (local employment opportunities, the stock market, politics, consumer confidence, etc). They are each likely impacting the current market adjustment to some degree.
We have all expected that the pace of appreciation of San Francisco real estate would start to cool down a bit. While we may have reached that point, I definitely do not view this as the bursting of a bubble.
If you’ve been thinking of selling or buying a home, give me a call and we can chat about how this market shift could impact your real estate goals.
It’s been another wild year in SF real estate. The median sale price for a condo is $1,100,000 which is up more than 15% from a year ago. Single family home prices jumped almost 13% to $1,250,000. As we enter 2016, that strong upward trend is likely going to cool. With mortgage interest rates increasing and international financial markets showing more signs of instability, my prediction is that we’re likely heading toward a somewhat less robust seller’s market than we have seen in the last few years. As always, it will be interesting to see how things unfold. If you are thinking of selling or buying a home, feel free to get in touch, I’m here to help.
Every day without fail, someone asks me how the market is doing. I love this because it tells me that people are interested in our city and engaged with real estate. Everyone is curious about prices and trends and what the future may hold for the local real estate market in SF. I thought it may be helpful to prepare a city-wide 5 year trend of median prices of single family homes, condos, and TICs. So here it is! I have tons more data to share on a neighborhood level too, so just let me know if you have questions about your specific area of SF. Enjoy!
The Rockwell is a new and highly anticipated Pacific Heights condo community going up near the corner of Franklin and Pine. When it’s finished in late 2016, the project will include two 13 story buildings for a total of 260 condos. The Rockwell includes a 24 hour lobby attendant, owner’s club room, fitness center, plus a stunning rooftop lounge and outdoor terrace. The units are comprised of 1 and 2 bedroom homes priced from $749,000 to $1,624,000. The penthouse units will be priced higher. Most of the larger units include stacked parking for 1 car. Monthly homeowners dues range from the $800’s to high $900’s per month depending on the unit. It will be awhile before buyers can move in, but it looks like it will be worth the wait. Let me know if you’d like a preview tour of this impressive property.
The 2014 figures are in for the San Francisco real estate market. Median price for a condo is $953,000 (that’s a huge 25% jump from 2013). Median single family home price is $1,080,000 (up 14%). More info at www.NYTimes.com