MINNEAPOLIS (AP) — No Minnesota community has been affected more by the nationwide spike in flood insurance premiums than the far northwestern city of Roseau, where the specter of rates rising by as much as $400 a month has just about dried up the local housing market.
In the town of 2,600 residents, where the leading employer Polaris Industries is hiring, the real estate market should be booming.
Nearly the entire community lies within the Roseau River flood plain, hard-hit by a major flood in 2002, so mortgage lenders require purchasers to take out flood insurance. Last fall, people shopping for flood insurance and holders of policies coming up for renewal started getting premium quotes of $3,000 to $4,000 a year or more.
"The market's at a standstill," Roseau mortgage consultant Andy Jensen said.
After howls of protests, President Barack Obama signed a law Friday putting brakes on the 2012 overhaul of the federal flood insurance program that ended government subsidies for flood insurance and led to the immediate spike in premiums that have hit Roseau so hard.
But while the law offers instant relief for homeowners hit by premiums that soared overnight, for many the reprieve is temporary, including those in Roseau.
In Minnesota, some 947 owners of businesses and second homes are still facing premium increases of 25 percent a year until they give up their subsidies and start paying rates based on actual flood risks, according Federal Emergency Management Agency data compiled by The Associated Press.
Another 2,520 home and residential building owners could see rate increases of up to 18 percent per year.
Of those, 241 are located in Roseau — more than any other Minnesota city, according to the FEMA data.
Jake Ost and his wife, who are expecting their first child, found out quickly they couldn't afford a home anywhere in Roseau's flood zone. They made an offer on a house they really liked, and then found out the flood insurance premiums could reach $4,000 annually.