Sale of Foreclosure Homes in Arizona to Surge with Condos

by Peter Vernon on States

The sale of foreclosure homes will rise sharply in Arizona with the foreclosure of high profile high-rise residential projects – the Centerpoint condo towers in downtown Tempe and the High Street phase of the CityNorth mixed-use project in Phoenix.

The Centerpoint was once considered the symbol of Tempe’s residential boom, but the project would be soon sold off in an auction to be held in April in Maricopa County.

The high rises went into foreclosure when ML Manager LLC, which represents various investors, sued condo developer Tempe Land Company for failing to pay its loan of $135 million. Tempe Land is owned by Tempe-based development firm Avenue Communities LLC.

Just like most real estate projects, Centerpoint was built during the housing construction boom and collapsed when bank owned foreclosures rose to record levels. Centerpoint was built in 2005 and was set to include two towers with about 375 condo units near Sixth and Maple Streets and an upscale retail center, fine dining restaurants and a winery.

To support the project, which was aimed at attracting more affluent condo residents, the city of Tempe waived its previous building height requirements and approved the 30- and 22-story buildings. City officials argued that the towers will spur further downtown development.

The dream project however followed the path of smaller and low-profile residential properties that stepped up foreclosure short sales and the sale of foreclosure homes in the city.

Instead of attracting affluent residents, the Centerpoint towers have become temporary shelters for transients, turning into a symbol of the downfall of the real estate sector.

The fall of Centerpoint started when Mortgages Limited, formerly the biggest private commercial property lender in Arizona, filed for bankruptcy in 2008 following the suicide of its chief executive Scott Coles. Centerpoint was among its prime investments.

Developer Tempe Land tried its best to find additional financing to save the completed 22-story building and to complete the second tower, but the frozen financial markets pushed down Tempe Land and forced it into bankruptcy in 2008. The second tower was around 50-percent complete when Tempe Land sought bankruptcy protection.

The Centerpoint investors, including big-time real estate businessmen, Phoenix Suns players and hundreds of other property investors, formed a new company called ML Manager and filed foreclosure proceedings on the condo towers.

According to Arizona real estate professionals, the condo towers will intensify the condo market and the sale of foreclosure homes nearby because of its prime location, as shown in the big number of inquiries.