Blockbusting was a real estate practice that took place in the United States during the late 20th century, particularly after the end of World War II. This practice was first triggered by the 1917 Supreme Court decision in Buchanan against Warley, which made racial segregation of residential laws illegal. In response, sellers and estate agents used racial restrictions in private sales contracts, a practice that was subsequently made illegal by the 1948 Supreme Court decision in Shelley v. Kraemer. At this time, the sale of homes in most white neighborhoods to black Americans became legal.
Real estate agents and developers at 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 low property values and the perceived increase in crime, sold their homes at lower prices than the market 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 houses at market prices higher than the racial minorities (usually African Americans).
In order to convince white residents that black residents would soon take over the neighborhood, realtors would sometimes start blockbusting by selling a house to a black family in the middle of a completely white neighborhood. Other real estate agents have taken more indirect measures and have hired African Americans to traverse the neighborhood with their children or even to stage street punches. The racist ideas associated with black residents in a neighborhood have created fear in the surrounding white neighbors. After introducing this fear combined 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.
At the beginning of the 20th century, blockbusting was one of the few ways African Americans could get houses on the market. Middle-class African Americans, hoping to leave the declining conditions of the city center, paid inflated prices for these houses and were subsequently denied further claims for home repairs. This inability to maintain homes often led to undesirable living conditions for many families and, later, for many tenants.
Rather than creating new racially disaggregated neighborhoods, blocking has led to greater demand for only white suburbs. As these white residents left the city limits, they brought their tax contributions with them. With a decrease in tax revenues, many municipalities were forced to increase the cost of property taxes and the burden was transferred to residents who fell behind. Even with the increase in property taxes, municipalities reduce public services to meet budgetary constraints. With less public services available and higher property taxes, many potential home buyers have looked elsewhere for more attractive neighborhoods.
The Federal Fair Housing Act
In 1968, the federal government approved the Federal Fair Housing Act, which made housing discrimination based on sex, race, national origin, color and religion. Under this act, blockbusting was made illegal, although it continued to be practiced until 1980. Furthermore, the Federal Fair Housing Act made it illegal for brokers and real estate agents to offer speculation about the future racial composition of a neighborhood.