After Hurricane Katrina, why were prices of warehouse buildings in New Orleans related much more strongly to the size of the lot rather than the size of the building?

• A. Buildings retain more value than land in flood-prone scenarios.
• B. Most buildings were flooded and of little or no use.
• C. Lot size became the sole determinant of value.
• D. Building size is irrelevant to any pricing factors.

Answer: (B)

After Katrina, the widespread flooding left most warehouse buildings damaged or unusable. When the structures themselves have little to no functional value, what buyers value most is the land itself—the amount of land available for redevelopment, staging, and access. The lot size becomes the major driver of value because it sets how much usable space and potential future use the property can support, regardless of how big the existing building is. In this context, the price moves more with the land area than with the damaged structure.

Other options don’t fit because the scenario isn’t about building value prevailing over land, nor about lot size becoming the sole determinant, and it isn’t true that building size is completely irrelevant to pricing factors—there can be some salvage value, but the dominant factor after the flood was land value.