Thursday, July 10, 2008
Stars feel heat
LOS ANGELES (AP) — Tabloid magazines like to reassure us that celebrities are just like us. They go grocery shopping, take their dogs for strolls around the neighborhood, even pump their own gas.
These days, that also can apply to the plummeting real estate market. Several celebrities have faced foreclosure 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-style estate in Beverly Hills, a house he and his wife have been trying to sell for the past two years. The six-bedroom, 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," Mr. McMahon said recently on "Larry King Live."
He 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, 6 1/2-bath mansion had been on the market for $2.95 million. 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 Los Angeles' San Fernando Valley.
Rick Sharga, vice president of marketing for RealtyTrac, which monitors foreclosures, says people of any income level can get in trouble by buying overvalued homes at the peak of the market that ultimately they 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," Mr. Sharga says.
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 recently accepted a cash offer of $5.2 million after just 36 days on the market.
Yet 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 get 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, 7 1/2 bathrooms, a gym, a hair salon and a two-story guesthouse. An agent listed it last year for $5.999 million, then a month later took it off the market for seven months. Then June Ahn of Coldwell Banker Real Estate LLC got the house and listed it for $4.999 million; she reduced it soon afterward to $4.6 million and has reduced it again to $3.9 million.
"It was overpriced," Miss Ahn says. "The price difference from $5.999 [million] to $3.9 [million], obviously we'll have a bigger number of buyers that can afford to get into it and even take a look at it."
It helps that the husband and wife, who bought the house 17 years ago for about $1.8 million, own it outright. "They're very flexible; they just go with the flow of the market," Miss Ahn says.
The primary element driving where a celebrity chooses to live is privacy, says Jordan Cohen of Re/Max Olson & Associates Inc., who has represented more than 50 stars and athletes in real estate transactions, including Shaquille O'Neal and Marilyn Manson.
He says a star's property can bring in more money than a regular house.
"I know it adds value," Mr. Cohen says. "A good analogy would be, shoe companies pay athletes millions of dollars to wear a specific shoe, so you'll have young America buy that shoe because a celebrity endorses it. It's the same thing with a house."
However, Mark David, who follows celebrity real estate on his cheeky blog the Real Estalker, disagrees.
"It's not common. Property values are property values," says Mr. David, a 38-year-old graphic designer who writes under the pseudonym "Your Mama." "You've really got to be somebody for it to add cachet. Maybe if it's a major A-list celebrity who's going to go down in Hollywood history, like Jack Nicholson. But would you pay more for Danny Bonaduce's house? And I'm not trying to bag on him. I can't imagine that people would do it - then again, there's a lid for every pot."
Mr. Bonaduce's house, by the way, has been on the market for a year. The ornate Spanish-style mansion in the hills of Los Angeles' Los Feliz section was listed last July for $4.5 million. The price has come down only slightly to $4.2 million.
So why not drop the price further and finally sell the property?
"He can afford to wait it out for 20 years," says Alfonso Milanese of Show4you Realty, who co-listed the home with another agent when Mr. Bonaduce and his wife, Gretchen, filed for divorce. "It's such a minuscule mortgage on there. He's one of the few people who are not in dire straits in selling their house."
As for Mr. McMahon's home, "we've actually gotten a bunch of offers," his real estate agent, Alex Davis of Hilton & Hyland, said recently. "I think we're going to sell it very soon and that it's going to be onward and upward for the McMahons."