What Was Blockbusting?
Blockbusting was a real estate practice that took place in the US during the late 20th century, particularly after the end of World War II. This practice was triggered first by the 1917 Supreme Court decision in Buchanan vs. Warley, which made racially segregating residential laws illegal. In response, sellers and real estate agents employed racial restrictions in private sales contracts, a practice that was later made illegal by the 1948 Supreme Court decision in Shelley v. Kraemer. At this moment, selling homes in majority white neighborhoods to black Americans became legal.
Real estate agents and developers during that time used blockbusting methods to push wealthy, white residents out of certain neighborhoods by convincing them that minority groups would become their neighbors. These white families, mistakenly worried about lower property values and the perceived increase in crime, sold their homes at below market prices and left the neighborhood. This reaction is sometimes referred to as “white flight”. The real estate agents, who had worked to create this fear, then sold these homes at above market prices to racial minorities (usually African Americans).
In order to convince white residents that black residents would soon take over the neighborhood, real estate agents would sometimes begin the practice of blockbusting by selling a house to one black family in the middle of an all-white neighborhood. Other real estate agents took more indirect measures and hired African Americans to walk through the neighborhood with their children or even to stage fist fights in the streets. The racists ideas associated with black residents in a neighborhood planted fear in surrounding white neighbors. After introducing this fear coupled with the idea of decreasing property value and increasing crime, these real estate agents would leave flyers and business cards all over the neighborhood to encourage white owners to sell their homes. White homeowners were encouraged to sell quickly and get out of the neighborhood before their property lost its total value.
Effects of Blockbusting
In the early 20th century, blockbusting was one of the only ways that African Americans could obtain homes on the market. Middle class African Americans, hoping to leave the declining conditions of the inner city, paid inflated prices for these houses and later, were denied additional credit for home repairs. This inability to maintain homes often resulted in less than desirable living conditions for many families, and later, for many renters.
Rather than create new, racially desegregated neighborhoods, blockbusting led to an increased demand for white-only suburbs. As these white residents left the city limits, they took with them their tax contributions. With decreased tax revenues, many municipalities were forced to increase the cost of property taxes and the burden was passed on to the residents who stayed behind. Even with increased property taxes, municipalities cut public services to meet budget constraints. With less available public services and higher property taxes, many potential homebuyers looked elsewhere for more appealing neighborhoods.
The Federal Fair Housing Act
In 1968, the federal government passed the Federal Fair Housing Act, which made housing discrimination on the basis of sex, race, national origin, color, and religion. Under this act, blockbusting was made illegal, although it continued to be practiced until the 1980’s. Additionally, the Federal Fair Housing Act made it illegal for brokers and real estate agents to offer speculation about the future racial makeup of a neighborhood.