celebrity financial trouble

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.

"It was overpriced," Ahn said. "The price difference from $5,999,000 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," Ahn said.

"Unfortunately, this happens. Last year was better than this year. Now they realize they didn't reduce in time. They were hoping to get the best (price) last year, but it didn't happen. So they learned the lesson."

The primary element driving where a celebrity chooses to live is privacy, said Jordan Cohen of Re/Max, who has represented more than 50 stars and athletes in real estate transactions, including Shaquille O'Neal and Marilyn Manson. He's selling actress Joely Fisher's house -- a four-bed, seven-bath, midcen-tury Craftsman at the end of a secluded drive with a pool and a screening room for $3,295,000, about $1 million less than the asking price when another agent first listed it last summer.

He said he believes a star's property can bring in more money than a regular house.

"I know it adds value," said Cohen, sitting on a limestone countertop in the kitchen of the suburban Encino home. "A good analogy would be (that) 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."

But Mark David, who follows celebrity real estate on his blog "The Real Estalker" disagrees.

"It's not common. Property values are property values," said 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 does anybody really care about most of these people's houses? 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."