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, Miles Teller, and Anna Faris.
Unfortunately, unlike some of the better-financed celebrity fire victims, in a May 2025 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)
Cost To Rebuild
Heidi and Spencer’s home spanned just under 2,300 square feet and had previously been valued at $3.8 million.
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. I think what he meant to say was that they had been dropped by their private insurance company. For example, State Farm or Farmers.
Because they had a mortgage, it would have been impossible for Heidi and Spencer to operate without any insurance at all. Banks that hold mortgages 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 requires the borrower to enroll in California’s last-resort fire coverage known as the California FAIR Plan.
And as it turns out, according to a new interview with Spencer in the New York Times, they did indeed have a FAIR Plan policy which paid out around $1 million.
Unfortunately, even if the price per square foot to rebuild was $1,000, which it most certainly is not, their payout is still $1.3 million shy of what it would take to rebuild their former home. It’s $4 million shy of what they’ve been quoted.
This gap leaves people in an impossible position. Heidi and Spencer almost certainly would be best off selling the land and using that money, plus the insurance money, to buy a home somewhere else.
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. And in this scenario, where in California could Heidi and Spencer find a house for $2 million today that resembles their former lifestyle?
Oh! And to make it worse, they are still on the hook for the ongoing mortgage costs! When you put it all together, it’s truly a no-win situation: rebuild at a staggering cost that makes no financial sense, sell the land for a fraction of what they once had, or uproot their family and start over somewhere else. For Heidi Montag and Spencer Pratt, the fire didn’t just take their home — it wiped out years of equity, stability, and security, leaving them stuck between impossible math and heartbreaking choices.
Read more: Even With A $1 Million Insurance Payout, Heidi Montag And Spencer Pratt Can’t Afford To Rebuild Their Pacific Palisades Home And Have No Good Options