Celebrities aren’t immune from real estate blunders. Though undeniably successful in the music business or on the big screen, many performers such as Beck and Nicholas Cage have been subject to the same market forces as everyone else. The 5 biggest celebrity real estate blunders are detailed here. Read this full article from The Street to learn more.
No matter how big they are, how many cars their garages fit, how many pools they have or how many of them a celebrity owns around the world, celebrity homes are subject to the same market forces as anyone else’s.
Investing millions of dollars in a home doesn’t mean a celebrity won’t take a bath if the market wanes or their own finances whittle away. Real estate data firm RealtyTrac found that foreclosures rose to a record 1.05 million last year, eclipsing the previous record of 918,000 a year earlier. That means 26% of all homes sold in 2010 were foreclosures.
That came during a period when personal bankruptcies rose 9%, to more than 1.5 million, reaching their highest point since bankruptcy law reform was introduced in 2005, according to the American Bankruptcy Institute and National Bankruptcy Research Center. Meanwhile, the National Association of realtors notes that the median price of existing homes plunged from $198,100 in 2008 to $158,800 in January.
Those foreclosure numbers aren’t expected to wane anytime soon. RealtyTrac found that 2.9 million homes got foreclosure notices in 2010, with 20% more than that total expected to be in trouble this year.
Celebrities may be better able to weather a huge loss on a home sale, but that doesn’t mean they’re immune from losing a bundle on their extra-large listings. The following are just five of the famous faces who took a hit in the housing market:
When you lose $2 million on your house and that’s not even your biggest public loss of the year, that’s a pretty good sign you’re on the A-list.
Such are the woes of Scarlett Johansson, who parted with $7 million for a 1931-vintage Spanish hillside villa in Los Angeles’ swanky Outpost Estates neighborhood back in 2007, the same year she started dating Ryan Reynolds. After three years, one marriage, turns in Iron Man 2 and Woody Allen’s Vicky Cristina Barcelona and renovations to the mansion including windows, doors, appliances and tech upgrades, Johansson inexplicably turned around and listed her 4,300-square-foot, seven-bedroom manse in 2009 for $5.1 million.
Maybe neighbors such as Charlize Theron, Felicity Huffman, William H. Macy and Orlando Bloom gave off too much star power to get a decent sleep without blackout curtains. Maybe the lap pool and spa were just too small. Either way, she likely didn’t have time to look the place over before she left; she sold it for just less than $5 million. Six months later, she and Reynolds called it quits.
It’s getting tougher to figure Beck out. When fans think he’s a stripped-down antifolk hero, he goes and blows some serious cash just to remind them he’s a millionaire Scientologist.
At least now they can safely subtract "real estate expert" from his resume. Last year alone, Beck lost about $1.5 million trying to flip two properties in a tough California housing market.
The first — a 1,600-square-foot, three-bedroom, two bathroom ranch with a two-bedroom guest house with a massive fireplace — sold for $1.7 million last February after Beck bought it for $2.1 million in 2007. As Beck’s losses go, dropping $400,000 is like dropping a $10 bill on the subway.
Beck probably didn’t count on that three-year strategy biting him twice when he bought a 5,700-square-foot, six-bedroom, nine-bathroom home with a library, recording studio and lane pool for $6.8 million back in 2007. In fact, he had such high hopes for the place that he put it back up a year later for $9 million. Years passed, the recession came, fewer people cared that Beck was the guy who sang Loser and the property lingered on the market until last year, when it caught the eye of Grey’s Anatomy and Private Practice producer and writer Shonda Rimes. Instead of meeting Beck where he was at, however, Rimes saw his unrealistic asking price and undercut it by about $4.4 million — or $1.2 less than Beck initially paid. Loser, indeed.
If you think Beck would have had an easier time in New York, just ask Kravitz how little the homebuying public is willing to spend on ’90s rock stars’ unwanted real estate. In Kravitz’s case, though, it wasn’t as much about money as it was about timing.
Back in 2001 — when Kravitz was still three years into his streak of winning four Best Male Recording Artist Grammy awards, still had songs such as Again and Dig In getting airplay, was making cameos in films such as Zoolander and was generally cared about — the rocker listed a 6,000-square-foot, five-bedroom, seven-bathroom duplex in New York’s Soho for more than $17 million.
Though the terrorist attacks of Sept. 11, 2001, took a toll on all New York real estate, the property failure at Kravitz’s peak should have been the first warning sign. Three years later, Kravitz dropped the asking price to roughly $13 million. The 3,000 feet of outdoor space wasn’t enough, however, and Kravitz had to take the place back off the market in prerecession 2006.
Kravitz then put $1 million worth of work into the place, brightening it with a marble fireplace, two suspended glass staircases, a terrace with a wood-burning fireplace and roof deck with a built-in barbecue. The asking price this time around? Back up to $19.5 million.
Anyone who’s tried to sell property in the past four years — high-end or otherwise — knows what happened next. Kravitz’s home languished for another three years until Kravitz’s agents smacked some sense into his selling price and dropped it to $14.9 million.
That was the magic number. Alicia Keys and Swizz Beats took the place off his hands last year.
Kravitz isn’t taking it too badly: He still owns properties in Paris, New Orleans and Rio, among other places, and still sold the Soho place for more than the $7 million to $8 million he paid for it in 2001. By having no clue about the real estate world around him or how bigger events could influence his seemingly small sale, Kravitz went $1 million and almost 10 years into pocket just to unload a place he clearly never wanted.
Instead of just taking every bad sci-fi and "action" script thrown at him, Nicolas Cage should just concede his money troubles and make a documentary called How To Take A Multimillion-Dollar Bath.
Cage has a $1.7 million home in Newport Beach, Calif., listed for less than $1 million and a $15.7 million Rhode Island estate on the market for $7.8 million. It seems crazy, but so does Cage’s roughly three-year adventure in the real estate market.
In 2009, the IRS filed a put a lien on some of Cage’s property in Louisiana and said he owed them roughly $6 million for purchases made in 2007. Cage wasn’t undergoing quick sessions of shop therapy at the local mall, mind you, but picking up that Rhode Island mansion, the more than $8 million Milford Castle in Bath, England, and some car leases: a five-year, $7,700-a-month lease on a 1964 Rolls Royce SC III; and a $3,600-a-month lease on a 2002 Rolls Royce Corniche. As a result, his two $3.5 million homes in New Orleans were sold back to the bank for a combined $4.5 million, an $8.5 million home in Las Vegas went for $5 million, a $9.5 million Manhattan apartment for $7.5 million and — most crushing — a Bel-Air Tudor mansion he’d listed for $35 million hit the bargain bin at $10.5 million after it went into foreclosure.
Cage sued his business manager for $20 million over these losses in 2009, which which didn’t do much good when that manager countersued and spilled the beans about other portions of his spree, including $33 million in homes, 22 cars, 47 pieces of artwork and a $276,000 skull of a Tarbosaurus dinosaur.
If ever there was a year for Toni Braxton to write another sad love song, it was 2010.
The six-time Grammy winner saw her $2.6 million home in Henderson, Nev., go into foreclosure and sell for little more than $1 million after she and her company, Liberty Entertainment, filed for bankruptcy last September. Braxton ran up debt ranging from $10 million to $50 million against only $1 million to $10 million in assets, and the worst of her troubles haven’t ended.
Her $1.2 million home in Duluth, Ga., just went into foreclosure proceedings, marking the latest financial aftershock from a string of dates Braxton canceled in Las Vegas in 2008 after chest pains she experienced during performances. Those pains were later diagnosed as a heart problem that insurer Lloyd’s of London called a "pre-existing condition" when refusing to cover her losses.
Later that year, she was forced to pull out of the series finale of ABC’s Dancing With The Stars when she had a breast tumor removed. Braxton can’t be blamed for her health issues, but creditors including the Internal Revenue Service, Flamingo Las Vegas hotel and casino, the Four Seasons Hotel in Washington, D.C., Cedars-Sinai Medical Center, Neiman Marcus, the Screen Actors Guild, RCA Music Group and Tiffany & Co.(TIF) aren’t very sympathetic.
If anyone knows the difference between medical hardship and outright financial irresponsibility, though, it’s Braxton. This is the singer’s second bankruptcy after filing in 1998. Unlike her current situation, her past troubles were brought on by a split with her record label and poor financial choices, including accumulating $500,000 in overdraft fees in 1997 alone.
This article was republished with permission from The Street.