Justin Bieber has been hit by the housing crisis too, guys. The 18-year old singing sensation -- and purveyor of advice on how to be a good boyfriend -- can't get the mortgage he wants on a 9,000 square foot property near Hollywood, TMZ reports. That's because the appraisal value of the property was more than $1 million less than the $7 million plus asking price.
It seems even Bieber's windswept locks probably won't be enough to save him from this pervasive problem. Home-builders and real estate agents say they're seeing more contracts fall apart, largely due to appraisals that come in below negotiated value, according to the Wall Street Journal. In order to keep deals like Bieber's from falling apart, buyers either have to put more money down or sellers have to agree to cut their asking price.
Real estate appraisers have been roundly criticized for fueling the housing bubble by inflating property values during the lead up to the crash. For their part, 90 percent of real estate appraisers said that during the housing boom they were pressured, usually by mortgage brokers, to inflate property values in order to keep deals from falling through, according to Slate. The problem was so bad that it became one of the targets of financial reform legislation, which includes provisions requiring more state enforcement standards on appraisals.
Now, as potential buyers struggle to qualify for loans in the aftermath of the housing bust, critics are deriding home appraisers for being too stingy, according to the WSJ. "Robo-appraising," or computerized real estate appraisals, are often underestimating home values making it difficult for homeowners to refinance their mortgages.
If the Biebs ultimately conquers his appraisal problem (we will start counting down until the episode of MTV's Cribs) he better keep current on his mortgage payments or he could end up in foreclosure like some of his celebrity colleagues. Just a few examples: Football star Terrell Owens is currently facing foreclosure on two of his homes and actor Nicolas Cage saw his foreclosed home sell for half the price he paid for it, according to Zillow.
Here are some other celebrities facing housing troubles:
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