Flood insurance rates are soaring in New Orleans area. The West Bank is ground zero.

But in the last few years, her homeowners insurance has doubled and her annual flood insurance premium has crept up from less than $300 to more than $700. Under FEMA's new flood insurance rating system, it's projected to keep climbing.

In Mayville's 70053 ZIP code, the average premium will increase from $1,139 a year to $3,023 a year, phased in at 18% hikes each year for existing policies. For people like Mayville, 71, who live on a fixed income, the increase has her rethinking everything she'd planned for in retirement.

"Do I get a reverse mortgage? Do I consider moving?" she asked. "It's not sustainable."

Rising rates

When FEMA released its new Risk Rating 2.0 system last year, policymakers and property owners across Louisiana were floored. The new system showed that statewide, flood insurance premiums will more than double for single family homes, increasing by some 134% on average.

In the New Orleans area, the West Bank will be particularly hard hit. An analysis by The Times-Picayune of projected rate hikes by ZIP code shows that in the seven ZIP codes in West Jefferson and Algiers, rate hikes will average 250%.

In parts of Harvey, the average increase could top 300%.

Those kinds of increases threaten to price homeowners out of the market.

FEMA argues that the new rating system corrects pricing inequities for policyholders living in low- and moderate-income communities, while positioning the program for the future by making the system adaptable to the challenges posed by climate change.

But state and local governments are challenging the ratings system, which they say lacks transparency, doesn't align with existing FEMA flood maps and fails to take into account billions of dollars in flood protection measures and new levees that have been put in place. While lawsuits have been filed, they can take years to resolve. In the meantime, new, higher flood insurance premiums are coming due.

Jefferson Parish Council member Deano Bonano, who represents Harahan, Westwego, River Ridge, Old Jefferson, and parts of Marrero and Harvey, said representatives have been meeting with the Jefferson Parish congressional delegation for more than a year in search of a solution.

"It's going to make southeast Louisiana unaffordable for some people to live," he said. "It's life or death for us. When you've got people priced out of living in their traditional, generational homes that's a problem."

'Crippling'

Robin Angelica is one of those in danger of being priced out. After the floodwaters that followed Katrina destroyed her house in Lakeview, Angelica bought a home in Marrero, where her family had lived for generations. She was drawn to its small town feel, quieter streets and affordability.

Now, Angelica's finances are a ticking time bomb. In her ZIP code, 70072, flood insurance rates will go from $777 a year on average to $2,690. That will likely double her house note.

Single and nearing retirement age, Angelica said she will likely have to sell her home and possibly rent.

"This will create hardship," she said. "The first thing I thought was where do I move?"

The flood insurance hikes come as property owners are also dealing with sticker shock from the massive increases to their homeowners insurance policies, which skyrocketed last year when dozens of Louisiana insurers went out of business or stopped writing policies. Gretna resident Tiffany Riddle, a residential real estate broker with TCK Property Marketplace, saw her annual homeowners policy double to $4,400. To make sure there was enough cash in her escrow account to cover the new, higher premium, her lender said she needed to put in an extra $300 per month.

Under Risk Rating 2.0, her flood insurance is poised to increase from $2,800 to $7,420.

"At least the flood insurance increases will be phased in gradually," Riddle said. "This has been all at once and it's crippling."

Sales slump

Riddle is starting to see the impact in the market, as are other real estate agents that specialize on the West Bank. Fewer homes are changing hands. Those that are listed for sale are spending more time on the market. Median sale prices, if they're increasing at all, are doing so more slowly than in the past.

In Riddle's ZIP code, 70053, the volume of home sales from January through April was down by one-third compared to the same time last year, while the average days properties spent listed on the market more than doubled.

Granted, residential real estate has cooled throughout the market and the averages in 70053 are not out of line with those of many other ZIP codes. But because the area has always been such a strong market for middle class homeowners, Riddle and others are worried about what the increases will do for people on tighter budgets.

"If you're shopping on the West Bank for a $250,000 house, you might not be able to afford a $10,000 premium like someone who is buying a $1 million house Uptown," Riddle said.

Double speak

While elected officials at the state and local levels are trying to call attention to the problem, they're frustrated that flooding mitigation efforts don't seem to be factored into the new rating system.

In the years since Katrina, Gretna mayor Belinda Constant said the city and parish have put up millions in flood mitigation including drainage projects to alleviate flooding downtown, as well as federal levee projects. They recently spent $7 million on Gretna City Park, which has helped alleviate flooding for a section of the city dubbed "the resilience district" that includes the highest concentration of properties with multiple National Flood Insurance Program claims in the state.

"Why did we spend so much money on levees, on levee protection...to make sure that if you were inside the levee system, you would reap the benefit of a cost savings on insurance?" she said. "That's what we were told and that's why we spent so much money."

No protection

While homeowners and real estate professionals say they're starting to feel the effects of the insurance issues in a very real way, it's not too late to turn things around, according to veteran real estate broker Scott Brannon with Latter and Blum.

For now, Brannon said, buyers and sellers are getting creative to get deals done. He's had sellers who were in a hurry to move offer to pay $5,000 toward the first year of flood insurance.

Others are simply opting to forego flood insurance altogether. Between January 2022 and 2023, the number of flood insurance policy holders in the state fell by some 24,450, a nearly 5% decline, according to Peter Waggonner, public policy manager with GNO, Inc.

That's a gamble that worries economic development officials and policy makers, who know that in the event of a major disaster, many people would be unable to afford to rebuild.

Terrytown resident Gail Williams is planning to take the risk. The street where she has lived for 38 years has never flooded.

Nonetheless, her premiums which have hovered between $400 to $500 rose to about $700 last year. Under the new rating system, she said, they'll gradually reach $3,800 or more.

"I can assure you I am not going to buy flood insurance once it gets to $1,000," she said. "They don't want us to live in south Louisiana. Between the flood and the homeowners insurance it's a clear message."