Blockbusting Definition, Examples, and Implications

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. By tapping into homeowners’ racial or class biases, these real estate speculators profit by selling the properties in question for inflated prices to new buyers.   Blockbusting Blockbusting occurs when real estate professionals convince homeowners to sell their properties for cheap prices for fear that shifting demographics will cause them to depreciate in value.  White flight and blockbusting typically happen simultaneously. White flight refers to the mass exodus of whites from neighborhoods once members of racial minority groups move in.  Blockbusting took place routinely in Chicago prior to 1962, and the city remains highly racially segregated.  The Fair Housing Act of 1968 made blockbusting less common, but African Americans continue to face housing discrimination and own homes that are much lower in value than properties whites own.   White Flight and Blockbusting Blockbusting and white flight have historically worked in tandem. White flight refers to the mass exodus of whites from neighborhoods when a black family (or members of another ethnic group) move in. For decades, housing segregation in residential neighborhoods meant that whites and blacks didn’t live in the same areas. Due to racial prejudice, the sight of a black family on the block signaled to whites the neighborhood would soon deteriorate. Real estate speculators not only preyed on these fears but would sometimes initiate them by intentionally selling a home in a white neighborhood to a black family. In many cases, one black family was all it took to motivate white residents to quickly unload their homes and depress market values in the process.   Today, the term white flight might seem passe, since gentrification receives far more attention. Gentrification occurs when members of the middle or upper classes displace lower-income residents from neighborhoods by driving up rent and home values and changing a community’s culture or ethos. According to the 2018 study â€Å"The Persistence of White Flight in Middle-Class Suburbia,† however, white flight remains a problem. The study, written by Indiana University sociologist Samuel Kye, looked beyond the white-black dynamic, finding that whites leave middle-class neighborhoods when Hispanics, Asian Americans, or African Americans begin to settle there. Kye found that white flight was more prevalent in middle class neighborhoods than in poor neighborhoods, meaning that race, not class, seems to be the factor most likely to impel whites to put their homes on the market. The study determined that 3,252 of 27,891 census tracts lost at least 25 percent of its white populati on between 2000 and 2010, â€Å"with an average magnitude loss of 40 percent of the original white population. A Historic Example of Blockbusting Blockbusting dates back to the early 1900s and reached its peak in the years after World War II. The practice has a long history in Chicago, still one of the nation’s most segregated cities. Violence was used to keep the neighborhood of Englewood white, but it didn’t work. Instead, real estate brokers urged the whites there to put their homes on the market for a number of years prior to 1962. This tactic caused demographic shifts in two to three Chicago blocks on average. According to a report that examined 33 parcels in Chicago, real estate speculators â€Å"earned an average premium of 73 percent† for blockbusting.   A 1962 article in the 1962 Saturday Evening Post,  Ã¢â‚¬Å"Confessions of a Blockbuster,† describes the blockbusting that unfolded when a bungalow owner sold the home to black tenants. Immediately afterward, property speculators who owned three nearby properties sold them to black families. The remaining white families sold their homes at a considerable loss. Before long, all of the white residents left the neighborhood.   Blockbusting’s Impact Traditionally, African Americans paid a hefty price for white flight. They didn’t benefit from white homeowners selling their properties for low prices since speculators, in turn, upsold these homes to them. This practice put homebuyers of color in a precarious position, making it difficult to get loans to improve their homes. Landlords in neighborhoods affected by blockbusting reportedly exploited renters by not investing in better living conditions for their new tenants. The resulting dip in housing standards lowered property values even more than white flight already had.   Real estate speculators weren’t the only ones who gained from blockbusting. Developers also profited by building new construction for the whites who fled their former neighborhoods. As whites moved to the suburbs, their tax dollars left cities, further weakening the housing in urban areas. Fewer tax dollars meant fewer municipal resources to maintain neighborhoods, making these parts of town unappealing to homebuyers from a variety of racial and socioeconomic backgrounds. The blockbusting trend began to change when Congress passed the Fair Housing Act of 1968 after the assassination of the Rev. Martin Luther King, who championed fair housing in cities such as Chicago. While the federal legislation may have made blockbusting less overt, housing discrimination has persisted. Cities like Chicago remain racially segregated, and homes in black neighborhoods are worth significantly less than homes in white neighborhoods. Sources Gaspaire, Brent. â€Å"Blockbusting.† BlackPast.org, 7 January 2013.  Jacobs, Tom. â€Å"White Flight Remains a Reality.† Pacific Standard, 6 March 2018.  Kye, Samuel H. â€Å"The Persistence of White Flight in Middle-Class Suburbia.† Social Science Research, May 2018.Moser, Whet. â€Å"How White Housing Riots Shaped Chicago.† Chicago Magazine, 29 April 2015.  Trapasso, Clare. â€Å"Racial Gap: Homes in Black Neighborhoods Are Worth This Much Less Than in White Ones.† Realtor.com, 30 November 2018.