Heidi Montag And Spencer Pratt Can't Afford To Rebuild Their Pacific Palisades Home

Back in 2017, Heidi Montag and Spencer Pratt planted roots in one of LA's most exclusive neighborhoods: the Pacific Palisades. The couple paid $2.52 million for a modest but scenic three-bedroom home perched above the Santa Monica Mountains. Over the next several years, they raised two sons there, launched businesses, and plotted a second act in entertainment.

Tragically, in January 2025, their home was destroyed in the massive California wildfires that swept through the area. In the lead-up to the home's destruction, Montag and Pratt posted haunting footage to TikTok showing the blaze creeping toward their home. Hours later, their security cameras captured the flames engulfing everything they owned.

Montag and Pratt were among dozens of high-profile residents in Pacific Palisades and Malibu who lost their homes in the fire. Others affected include Paris Hilton, Adam Brody, Billy Crystal, and Anna Faris.

Unfortunately, unlike some of the better-financed celebrity fire victims, in an interview with The Independent, Heidi claimed that they cannot afford to rebuild.

"They're saying it's going to cost $5 million to rebuild the house that cost a third of that. We just don't have the finances."

(Photo by Mindy Small/FilmMagic)

Their home measured just under 2,300 square feet and was valued at $3.8 million before the fire.

Before the fire, a general formula for calculating the cost to build or rebuild a home in an upscale California neighborhood like the Palisades was $1,000 per square foot. For a 2,300 square foot home, that would have equated to $2.3 million. Before the fire, if someone wanted to build an extremely high-end home, one MIGHT have used $1,500 per square foot. That would have equated to $3.45 million to rebuild, and that would have meant you are using extremely expensive marble, custom millwork, imported fixtures, luxury appliances, and top-tier architectural finishes throughout.

If it's truly going to cost Heidi and Spencer $5 million to rebuild, that equates to an astonishing $2,173 per square foot.

According to Montag, the increased cost is the result of skyrocketing construction prices, supply chain issues, labor shortages, and permitting delays, factors that have made rebuilding in post-fire zones nearly impossible for anyone without deep financial reserves.

What About Insurance?

In several interviews in the days following the fire, Spencer indicated that he and Heidi had been dropped by their private insurance company just four months before the blaze. If that is true, it's extra devastating.

However, this detail raised an important question: how could they still have a mortgage without fire insurance? If you have a mortgage, your bank will require that you maintain continuous insurance coverage as a condition of their loan. When private insurance is canceled or lapses, the lender typically steps in to purchase force-placed insurance or require the borrower to enroll in California's last-resort fire coverage known as the California FAIR Plan.

Let's assume that's what happened in this case. The problem with the highest level of coverage from the California FAIR Plan tops out at $3 million. For a house of Heidi and Spencer's size, they almost certainly opted for the $2 million coverage plan to lower their annual insurance cost. So in this scenario, they might be in line to receive $2 million from insurance. Had the price per square foot been $1,000, their rebuild costs would have been $2.3 million. Doable. Anything above that is a really tough situation. In this scenario, Heidi and Spencer would be best off taking the $2 million insurance, selling the land, and moving on.

And who knows what the land is even worth now… Consider this: Let's say it truly would cost $5 million to build a 2,300 square foot home. If someone came in and bought the lot for $1 million, after spending $5 million to rebuild, they would be all-in for $6 million. For a home that was previously estimated to be worth a little under $4 million. The math is tough.

In the meantime, Heidi and Spencer are paying a mortgage on a lot they cannot afford to build on, while renting a temporary home in Santa Barbara. What would you do?