This strategy involves making homeowners believe the supposed changes will negatively affect property values or quality of life. Blockbusters then may resell or rent the properties with larger profit margins. Historically, the practice of blockbusting—common in many major U.S. cities just after World War II—often leveraged racial prejudice and fear among White homeowners to make them believe their neighborhoods and property values would be negatively affected by the arrival of a large number of Black residents. Due to housing supply shortages and increased demand, blockbusters were positioned to turn profits by reselling or financing those properties at much higher rates to Black people, whose options for housing and financing were more limited than their White counterparts. Blockbusting was outlawed as discriminatory in 1968 with the passing of the Fair Housing Act, which is Title VII of the Civil Rights Act. Now, the Fair Housing Act prohibits discrimination in the sale or rental of housing based on:
RaceColorNational originReligionSex (including gender identity and sexual orientation)Familial statusDisability
Federal regulation prohibits profiting by convincing homeowners to sell or rent because a demographic change may have negative effects such as decreasing property values, increasing crime, or general deterioration of quality of life and services.
Example of Blockbusting in Real Estate
An example of blockbusting can be found in 1954 in Palo Alto, Calif. At the time, the Black population in the area was growing, yet racial segregation and discrimination made finding housing extremely difficult. That is, until one White homeowner in a Whites community in East Palo Alto sold his home to a Black family, as documented in the book “The Color of Law” by Richard Rothstein. After that, Floyd Lowe, then-president of the California Real Estate Association, quickly spread propaganda that a coming “Negro invasion” would undercut property values. Subsequently, Lowe, other real estate agents, and their speculators purchased homes from White owners in East Palo Alto in large numbers at reduced prices. Then they advertised them to Black buyers and sold them with large markups. Although blockbusting and other forms of housing discrimination became illegal in 1968, various forms still persist today. If you believe you have been a victim of housing discrimination, you can file a claim with the U.S. Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity (FHEO). Redlining is the act of refusing a person access to a loan for property in a particular neighborhood based on their race, color, religion, nationality, sex, or marital status—or those characteristics of the neighborhood’s current residents—rather than on economic factors or financial qualifications. Much like blockbusting, redlining has historically been used to discriminate against Black homebuyers.
Pay damages to you, including for “humiliation, pain and suffering”Provide other “relief,” such as allowing access to loans without discriminationPay a civil penalty to the federal governmentPay your attorney’s fees and other costs
Penalties may be more severe for repeated instances of discrimination. For more information on complaints and penalties, here’s a fair lending guide for borrowers.
