Again in 2017, Heidi Montag and Spencer Pratt planted roots in considered one of LA’s most unique neighborhoods: the Pacific Palisades. The couple paid $2.52 million for a modest however scenic three-bedroom dwelling perched above the Santa Monica Mountains. Over the following a number of years, they raised two sons there, launched companies, and plotted a second act in leisure.
Tragically, in January 2025, their dwelling was destroyed within the huge California wildfires that swept by means of the world. Within the lead-up to the house’s destruction, Montag and Pratt posted haunting footage to TikTok displaying the blaze creeping towards their dwelling. Hours later, their safety cameras captured the flames engulfing all the things they owned.
Montag and Pratt had been amongst dozens of high-profile residents in Pacific Palisades and Malibu who misplaced their properties within the fireplace. Others affected embrace Paris Hilton, Adam Brody, Billy Crystal, and Anna Faris.
Sadly, not like a few of the better-financed superstar fireplace victims, in an interview with The Impartial, Heidi claimed that they can’t afford to rebuild.
“They’re saying it’ll price $5 million to rebuild the home that price a 3rd of that. We simply do not have the funds.”
(Photograph by Mindy Small/FilmMagic)
Their dwelling measured slightly below 2,300 sq. toes and was valued at $3.8 million earlier than the fireplace.
Earlier than the fireplace, a basic system for calculating the fee to construct or rebuild a house in an upscale California neighborhood just like the Palisades was $1,000 per sq. foot. For a 2,300 sq. foot dwelling, that may have equated to $2.3 million. Earlier than the fireplace, if somebody needed to construct an especially high-end dwelling, one MIGHT have used $1,500 per sq. foot. That will have equated to $3.45 million to rebuild, and that may have meant you’re utilizing extraordinarily costly marble, customized millwork, imported fixtures, luxurious home equipment, and top-tier architectural finishes all through.
If it is actually going to price Heidi and Spencer $5 million to rebuild, that equates to an astonishing $2,173 per sq. foot.
In line with Montag, the elevated price is the results of skyrocketing development costs, provide chain points, labor shortages, and allowing delays, components which have made rebuilding in post-fire zones almost unattainable for anybody with out deep monetary reserves.
What About Insurance coverage?
In a number of interviews within the days following the fireplace, Spencer indicated that he and Heidi had been dropped by their non-public insurance coverage firm simply 4 months earlier than the blaze. If that’s true, it is further devastating.
Nevertheless, this element raised an vital query: how may they nonetheless have a mortgage with out fireplace insurance coverage? When you’ve got a mortgage, your financial institution would require that you just preserve steady insurance coverage protection as a situation of their mortgage. When non-public insurance coverage is canceled or lapses, the lender usually steps in to buy force-placed insurance coverage or require the borrower to enroll in California’s last-resort fireplace protection often known as the California FAIR Plan.
Let’s assume that is what occurred on this case. The issue with the best degree of protection from the California FAIR Plan tops out at $3 million. For a home of Heidi and Spencer’s dimension, they virtually definitely opted for the $2 million protection plan to decrease their annual insurance coverage price. So on this state of affairs, they may be in line to obtain $2 million from insurance coverage. Had the value per sq. foot been $1,000, their rebuild prices would have been $2.3 million. Doable. Something above that could be a actually robust scenario. On this state of affairs, Heidi and Spencer can be finest off taking the $2 million insurance coverage, promoting the land, and transferring on.
And who is aware of what the land is even price now… Take into account this: For example it actually would price $5 million to construct a 2,300 sq. foot dwelling. If somebody got here in and purchased the lot for $1 million, after spending $5 million to rebuild, they might be all-in for $6 million. For a house that was beforehand estimated to be price a bit below $4 million. The mathematics is hard.
Within the meantime, Heidi and Spencer are paying a mortgage on loads they can’t afford to construct on, whereas renting a brief dwelling in Santa Barbara. What would you do?