Two Pacific Heights flats, one street apart, both fully renovated with three bedrooms, three and a half baths, and parking. One is listed at $2.3 million. The other kind of unit in that neighborhood averages closer to $3.2 million. Same finishes, same block, nearly a million dollars apart.
The gap has nothing to do with the kitchen. It has to do with what's recorded at the county.
San Francisco runs two parallel ownership systems for multi-unit buildings, and most buyers scrolling listings never notice which one they're looking at until an agent or a lender points it out. One is a condominium: an individually deeded unit with its own title, governed by a homeowners association and recorded CC&Rs, financeable through any conventional lender. The other is a tenancy in common, usually shortened to TIC: a fractional, undivided interest in the entire building, with your right to occupy one specific flat spelled out in a private agreement rather than a deed. You don't own a unit. You own a percentage of a building, paired with a contract that says which rooms are yours.
That legal difference, not square footage or finish level, is what produces the price gap. And the size of that gap is a lot less stable than the listings make it look.
What the June 2026 numbers actually show
From January through May 2026, 120 TICs sold across San Francisco at a median price of $1.2 million. Ninety-three of those were in buildings with three or more units, and they closed at an average of 7.5 percent above list price, which tells you TIC demand in 2026 isn't soft. It's competitive within its own lane.
Where that demand concentrates says something too: Noe Valley and Eureka Valley, the Mission and Mission Dolores, the Marina, and Nob Hill and Telegraph Hill, all neighborhoods where condo prices already run high and a TIC is often the only way in without a seven-figure jumbo loan. The single highest TIC sale in that five-month stretch was a two-level penthouse at 430 Greenwich in Telegraph Hill, three bedrooms, three baths, two-car parking, a private elevator, and a copper soaking tub, which closed above $2 million. That sale alone is worth sitting with. Nobody buys a penthouse with a private elevator because they're settling for less. They bought a TIC because that was the ownership structure attached to the building they wanted, and the price still cleared two million dollars.
The unit wasn't discounted. The paperwork was.
Condo or TIC: what actually changes
| Condominium | Tenancy in Common | |
|---|---|---|
| Title | Individually deeded unit | Fractional interest in the whole building |
| Financing | Conventional or jumbo, broad lender pool | Fractional loans from a small pool of specialized lenders |
| Typical rate | Standard market rate | Often 0.5 to 1 percentage point higher |
| Down payment | Standard conforming guidelines | Usually larger, lender-dependent |
| Resale pool | Full buyer pool, including FHA/VA where eligible | Narrower, financing-limited buyer pool |
| Governing document | CC&Rs, HOA bylaws | Privately recorded TIC agreement |
The financing row is where the real story lives. San Francisco County's 2026 high-cost conforming loan limit for a single-unit property runs around $1.2 million, which means a condo buyer at that price point can shop rate and terms across hundreds of lenders. A TIC buyer looking at the same dollar amount is often working with a handful of portfolio lenders who underwrite the specific building's TIC agreement before they underwrite the borrower. Same price, completely different competitive landscape for the loan.
Why the discount refuses to sit still
Ask five people how much cheaper a TIC runs compared to an equivalent condo and you'll get five different answers, and that's not sloppiness. Estimates in the current market range from roughly 5 to 15 percent on the low end up to 15 to 30 percent for less liquid buildings, and the spread is real because the discount isn't a fixed neighborhood characteristic. It's a floating risk premium tied to how many fractional lenders are actively writing loans that month, how clean a specific building's TIC agreement reads to underwriting, and how comfortable that lender's credit committee feels about resale liquidity in the current rate environment.
That's the piece a portal search can't show you. A listing that looks 20 percent cheaper than the condo three doors down might reflect a well-drafted TIC agreement and a lender who knows the building, or it might reflect a shakier agreement that only one or two lenders in the city will touch. The percentage on paper doesn't tell you which.
The conversion math only works if you own half a building
A lot of TIC buyers assume the discount is temporary, that the building will eventually convert to condos and the value gap will close on its own. For two-unit buildings, that assumption has real footing. Under San Francisco Planning Code Section 1396.3, a two-unit building where each owner has occupied their exclusive-use unit as a primary residence for twelve consecutive months can bypass the conversion process entirely through an administrative filing, no lottery involved. It still takes a licensed surveyor, an attorney experienced in conversions, and typically six to twelve months from application to a recorded final map, sometimes twelve to eighteen if the building has outstanding violations. But it's a predictable path with no cap on how many buildings can use it in a given year.
The economics reward the wait. In comparable two-unit buildings in Noe Valley and Cole Valley, a unit worth roughly $1.1 million as a TIC has traded for $1.15 to $1.27 million after conversion, a per-unit gain of $50,000 to $170,000 against a conversion cost that typically runs $15,000 to $40,000.
Buildings with three to six units don't get that path. Their only route has always been the annual conversion lottery, and that lottery has been suspended since 2013. Legal analyses written a few years back projected it would resume sometime between 2024 and 2026. It's September 2026, and the lottery still hasn't reopened, with no filing date on the calendar. Treat any TIC in a building larger than a duplex as a permanent ownership structure, not a unit waiting for its condo title. The upside math above simply doesn't apply once you're past two units.
What to check before you write an offer
- Count the units in the building. Two-unit TICs have a real, administrative conversion path. Three to six unit buildings depend on a lottery that has been on hold for over a decade.
- If you're counting on the two-unit bypass, ask how long the other owner has occupied their unit and whether it has ever been rented. A rental history resets the twelve-month occupancy clock you need.
- Get pre-approved specifically for a fractional loan before you write an offer. A generic mortgage pre-approval doesn't confirm a lender will accept this building's TIC agreement.
- Read the recorded TIC agreement itself, not a summary. Transfer restrictions, rights of first refusal, and any master mortgage terms can all slow or block your eventual resale.
- Ask about the building's eviction history. An Ellis Act eviction within roughly the last ten years disqualifies the building from conversion entirely, lottery or bypass.
Quick answers
Is a TIC always cheaper than a comparable condo? Usually, but not by a fixed amount. The gap reflects financing friction that month, not a discount baked into the neighborhood or the unit.
Can I use a standard 30-year mortgage on a TIC? No. TIC purchases go through fractional loans from a small pool of specialized lenders, typically at rates half a point to a full point above comparable condo financing.
Will my TIC automatically become a condo someday? Only if the building qualifies for the two-unit bypass. Buildings with three to six units depend on a lottery that has been suspended since 2013 with no confirmed return date as of this writing.
Does a lower TIC price mean the building has problems? Not necessarily. The Telegraph Hill penthouse that sold above $2 million had a private elevator and a copper soaking tub. The price reflected the ownership structure, not the finish.
If you're weighing a TIC against a condo in San Francisco, the right call depends on your timeline, your lender options, and what that specific building's paperwork actually says, not on a percentage you saw in a listing description. Jose Diaz can walk through the numbers on a specific address with you and help you figure out what you'd actually be buying before you write the offer. Schedule a consultation to get started.
