Blockbusting is the practice of real estate brokers convincing homeowners to sell their houses for low prices for fear that a neighborhood’s socioeconomic demographics are changing and will decrease home values.
Full Answer
What are some examples of blockbusting in real estate?
The blockbusting practice among real estate agents may involve coercing property owners to sell their property by preying on people's fear of losing money from the decrease in property value. Examples of illegal real estate practices include:
What is blockbusting and how does it happen?
Here’s how Blockbusting happens: a real estate agent, or someone posing as one, comes to a homeowner and instills him (or her) with fear of racial minorities, saying and showing bogus stats that a large number of whatever minority the homeowner prejudicially feared was moving into their neighborhood in large numbers.
What was the blockbuster on all in the family?
The serious-comic television series All in the Family (1971–1979) featured "The Blockbuster", a 1971 episode about the practice, illustrating some real estate blockbusting techniques.
What is the difference between blockbusting and panic peddling?
The difference is that blockbusting agents use the information to spread rumors of the decline in property value in a particular area due to a specific ethnic group moving to that area. In contrast, panic peddling involves exploiting property owners' fears and causing them to panic.
What does blockbusting mean in real estate?
Blockbusting is the introduction of a group of people, who are considered foreigners, into a neighborhood to spike tension within the neighborhood,...
What is an example of blockbusting in real estate?
Blockbusting is an illegal real estate practice. An example is agents spreading rumors of a certain area's decline in property value due to a speci...
What is the difference between blockbusting and panic peddling?
The difference is that blockbusting agents use the information to spread rumors of the decline in property value in a particular area due to a spec...
What is blockbusting in real estate?
Blockbusting is another illegal real estate practice . With blockbusting, agents use panic peddling for financial gain. If agents can get individuals to panic and sell their homes, they make commissions off the sales and can potentially represent them when they purchase new ones.
When did blockbusting become illegal?
Finally in the 1960's, residents began to realize they were being cheated. People were selling their real property at a discount and then moving to new neighborhoods. Their lives were being uprooted by real estate agents, and people realized the amount of money agents made in these transactions. Blockbusting by agents, which was once encouraged, suddenly became illegal. Agents could lose their licenses, face time in jail, and be required to pay thousands in fines. Another Supreme Court case, Jones v. Alfred H. Mayer Co, declared that the federal government could prohibit discrimination in housing markets under the Thirteenth Amendment. In 1968, the Fair Housing Act was enacted. It created civil causes of action for victims of blockbusting.
Why did the housing market affect blacks?
Because housing was specific to blacks and other housing specific to whites, the prices of homes in each area were affected. Blacks needed homes, but prices were inflated because the supply wasn't great. An agent made more in commission by selling to a black client, so there was an incentive created for the agents to represent them. This made the problem even worse, because promoting neighborhoods segregated by race and ethnicity became even more attractive. If an agent could figure out how to open up white neighborhoods to black clients, there was a financial incentive for the agent involved.
How did real estate agents make money during the 1950s?
From around World War I to the 1950's, real estate agents made tremendous amounts of money by blockbusting. Neighborhoods were segregated, and many white families sold their homes at discounts to get out of neighborhoods they believed blacks were moving into.
Why did agents make more in commission?
An agent made more in commission by selling to a black client, so there was an incentive created for the agents to represent them. This made the problem even worse, because promoting neighborhoods segregated by race and ethnicity became even more attractive .
What was the role of the National Association of Real Estate Boards in keeping black and white neighborhoods segregated?
From 1917 to 1950, it was an ethical breach for an agent to sell a home to a client whose race or ethnicity might disturb the property values in a neighborhood.
Which case ruled that the sale of real property to particular races could not be enforced?
The government backed segregation of neighborhoods, which became clear in the decision of Shelley v. Kraemer. In the decision, the U.S. Supreme Court held that property deed provisions which prohibited the sale of real property to particular races could not be enforced.
What is blockbusting in real estate?
Blockbusting is a business process in which U.S. real estate agents and building developers convince property owners to sell their houses at low prices, which they do by telling house owners that racial minorities will soon move into their neighborhoods in order to instill fear in them. The agents then sell those same houses to black families, ...
When did blockbusting become possible?
Blockbusting became possible after the legislative and judicial dismantling of legally protected racially segregated real estate practices after World War II. By the 1980s it had mostly disappeared in the United States after changes in law and the real estate market.
How common was blockbusting in the 1960s?
Blockbusting was very common and profitable. For example, by 1962, when blockbusting had been a common practice for some fifteen years, the city of Chicago had more than 100 real estate companies that had been, on average, "changing" two to three blocks a week.
What case ruled that blockbusting was a violation of the freedom of expression?
In the case of Linmark Associates, Inc. v. Willingboro (1977), the Supreme Court ruled that such prohibitions infringed on the freedom of expression. Moreover, by the 1980s, as evidence of blockbusting practices disappeared, states and cities began rescinding statutes restricting blockbusting.
Where was blockbusting practiced?
Blockbusting was most prevalent on the West Side and South Side of Chicago, and also was heavily practiced in Bedford–Stuyvesant, Brooklyn, New York City; in the West Oak Lane and Germantown neighborhoods of Northwest Philadelphia; and on the East Side of Cleveland . The tactics included:
Where did the term "blockbusting" originate?
The term blockbusting might have originated in Chicago, Illinois, where real estate companies and building developers used agents provocateurs. These were non-white people hired to deceive the white residents of a neighborhood into believing that black people were moving into their neighborhood.
What was the purpose of the Fair Housing Act of 1968?
The Fair Housing Act of 1968 established federal causes of action against blockbusting, including illegal real estate broker claims that non-white people had or were going to move into a neighborhood, and so devalue the properties. The Office of Fair Housing and Equal Opportunity was charged with the task of administering and enforcing this law. In the case of Jones v. Alfred H. Mayer Co. (1968), the U.S. Supreme Court ruled that the Thirteenth Amendment authorized the federal government's prohibiting of racial discrimination in private housing markets. It thereby allowed black American legal claims to rescind the usurious land contracts (featuring over-priced houses and higher-than-market mortgage interest rates), as a discriminatory real estate business practice illegal under the Civil Rights Act of 1866, thus greatly reducing the profitability of blockbusting. Nevertheless, these regulatory and statutory remedies against blockbusting were challenged in court. As a result, it was decided that towns cannot prohibit an owner from placing a "FOR SALE" sign before their house, even if prohibiting this practice reduces blockbusting. In the case of Linmark Associates, Inc. v. Willingboro (1977), the Supreme Court ruled that such prohibitions infringed on the freedom of expression. Moreover, by the 1980s, as evidence of blockbusting practices disappeared, states and cities began rescinding statutes restricting blockbusting.
Why was blockbusting so hard?
Blockbusting practices were nationally exposed in the 1960’s with the civil rights movement. Because of it, stricter federal real estate laws were conceived, which made blockbusting harder. For instance: door-to-door real estate solicitation got restricted in several states to avoid blockbusting. The most important measure against blockbusting, however, was 1968’s Fair Housing Act which made (by law) religion, race, and ethnicity of a neighborhood’s inhabitants part of what a real estate agent can’t tell a home buyer client when showing a house.
Why was door to door solicitation restricted?
For instance: door-to-door real estate solicitation got restricted in several states to avoid blockbusting. The most important measure against blockbusting, however, was 1968’s Fair Housing Act which made (by law) religion, race, and ethnicity of a neighborhood’s inhabitants part of what a real estate agent can’t tell a home buyer client ...
