Wednesday, Jul. 09, 2008

Realty downturn hits stars

Some celebs suffer foreclosure, others cut millions off mansions

LOS ANGELES -- Tabloid magazines like to reassure us that celebrities are just like us -- they go grocery shopping, take their dogs for a stroll around the neighborhood, even pump their own gas.

These days, that also can hold true when it comes to the plummeting real estate market. Several celebrities have dealt with foreclosure issues on their luxurious estates and many more have had to drop their asking prices, putting some high-profile faces on a growing problem: The real estate meltdown is hitting every socioeconomic class.

The case of Ed McMahon has shown that you can make millions over a lengthy show business career and still find yourself in foreclosure. Johnny Carson's former "Tonight Show" sidekick owes more than $644,000 in mortgage payments on his Mediterranean estate in Beverly Hills, a house he and his wife have been trying to sell for two years. The six-bedroom and five-bathroom home -- in the same exclusive, gated community where Britney Spears lives -- is on the market for $6.5 million, down from an original price of $7.6 million.

The 85-year-old television personality, who has been unable to work since breaking his neck in a fall 18 months ago, described his economic problems as "a perfect storm."

"If you spend more money than you make, you know what happens.

And it can happen. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen," McMahon said on "Larry King Live" recently. "You want everything to be perfect, but that combination of the economy, I have a little injury, I have a situation. And it all came together."

McMahon is not the only celebrity to find himself in such financial trouble. Former NBA player Vin Baker saw his home in Durham, Conn., go up for auction last weekend. The seven-bedroom, six-and-a-half-bath mansion, on about 11 acres with a basketball court and a bowling alley, had been on the market for $2,950,000.

Earlier this year, former baseball star and "Juiced" author Jose Canseco stopped making payments on his $2.5 million home in the upscale Encino section of L.A.'s San Fernando Valley.

Rick Sharga, vice president of marketing for RealtyTrac, which monitors foreclosures, said that people of any income level can get in trouble by buying overvalued homes at the peak of the market that they ultimately can't afford.

"Ed McMahon's a sympathetic character in this scenario, in that he got into a house that possibly he could have afforded if he had been able to keep working; then he had an injury that upset his financial apple cart pretty badly," Sharga said. "What you don't know is, in a normal real estate market, if the same lender would have taken a look at an 82-year-old man at the tail end of his career and written him a $4.6 million mortgage he had to keep working to be able to afford."

It's not all doom and gloom, of course. Avril Lavigne listed her nearly 6,900-square-foot Mulholland Estates mansion for $5.8 million and, after 36 days on the market, recently accepted a cash offer of $5.2 million.

But as celebrity real estate columns such as "Hot Property" in the Los Angeles Times and "Gimme Shelter" in the New York Post show, other stars can't command the same prices for their homes that they might have been able to a few years ago.

The price of Angela Bassett and Courtney B. Vance's house has dropped more than $2 million in the past year. The French Colonial in a gated section of Los Angeles' old-money Hancock Park neighborhood has five bedrooms, seven and a half bathrooms, a gym, a hair salon and a two-story guest house. An agent listed it last year for $5,999,000, then a month later took it off the market for seven months. Then June Ahn of Coldwell Banker got the house and listed it for $4,999,000; she soon reduced it to $4.6 million, and now has reduced it again to $3.9 million.