Just because you are rich and famous doesn’t mean that the housing bust isn’t taking a toll on your fat pocketbook. Hollywood’s elite are hemorrhaging millions on recent home sales in a housing market that is clearly deteriorating rapidly.

In Los Angeles, home sales plummeted a shocking 48 percent in December from a year earlier. And prices fell 11 percent to an average $470,000.

Not just the low-end homes are sitting on the market; the stars too are slashing prices to unload property. According to Sotheby’s International Realty, owners of homes in the $3 million to $6 million range are having the most trouble. At the higher end of the market, a Mulholland Drive estate just dropped from $25 million to $20 million after an offer fell through.

If you don’t feel too sorry for multi-millionaires losing a few hundred thousand—or a couple million—on property, you are probably not alone. However, much of America is sitting in the same leaky property boat.

The number of people unable to sell their homes at a profit or keep up with their mortgage payments is soaring. Across the United States, the number of houses entering some stage of foreclosure was up a whopping 79 percent in 2007 over the previous year.

Over 1 percent of all U.S. households were in some phase of foreclosure last year, up from about half a percent in 2006. And more than 1.8 million additional adjustable-rate mortgages are scheduled to reset to higher interest rates during 2008 and 2009. California is one of the hardest hit regions, with 1.9 percent of households receiving foreclosure filings last year.

Agence France Presse reports that for many people, the “American Dream” has become “a nightmare.” The way the economy is going, the supply of foreclosed homes hitting the market will continue to increase. And, though California is hardest hit, the problem is of national proportions.

One quirky aspect of this is that foreclosed homes are proving a boon for the homeless as former owners flee their debt-ridden properties. According to the National Coalition for the Homeless, the number of homeless people sleeping outside in downtown Cleveland has more than halved as street people take over vacant homes as squats. This is but an early indicator of how the subprime mortgage problem could easily escalate into presenting significant challenges to city authorities, converting former middle-class suburbs into city slums almost overnight.