Blockbusting
Blockbusting, also known as panic selling or panic peddling, is an unethical and illegal practice in real estate where a real estate agent or developer attempts to induce homeowners to sell their properties by exploiting fears about changes in the neighborhood’s demographic composition. Typically, this involves spreading rumors or misinformation about the entry or potential influx of minority groups into a neighborhood, which may lead to a decline in property values.
The goal of blockbusting is to persuade homeowners to sell their properties quickly and at reduced prices, allowing the agent or developer to profit from purchasing the properties at below-market rates and then reselling them for a profit or redeveloping the area for higher-value projects.
Blockbusting often preys on racial or ethnic prejudices and can have detrimental effects on both the targeted neighborhood and the individuals involved. It perpetuates discrimination, contributes to social divisions, and undermines the stability of communities.
In the United States, blockbusting is prohibited by the Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex, disability, and familial status. Additionally, many states have enacted specific laws and regulations to combat blockbusting and other forms of housing discrimination.
Overall, blockbusting is not only illegal but also unethical, and real estate professionals have a responsibility to uphold fair and equal housing practices and promote inclusive communities.