Blockbusting
An illegal practice of inducing homeowners to sell by claiming that the entry of minority groups will lower property values.
Full Definition
Blockbusting (also called panic selling or panic peddling) is an illegal practice where real estate agents, developers, or others profit by inducing homeowners to sell quickly — often at a loss — by spreading fear that members of a minority group are moving into the neighborhood and that property values will decline as a result. The blockbuster would then buy the homes cheaply and resell them at inflated prices, often to minority buyers who were excluded from other neighborhoods by discriminatory practices. Blockbusting is a federal crime under the Fair Housing Act and state fair housing laws. Even suggesting that a change in neighborhood demographics may affect property values is generally illegal.
Real-World Example
An investor sends letters to white homeowners in a neighborhood saying 'Black families are moving in — sell now before your property loses value.' This is blockbusting — it's illegal under the Fair Housing Act.
How Blockbusting Appears on the Real Estate Exam
Common question types, tested concepts, and what to watch out for
Blockbusting = inducing panic selling based on protected class entry. It benefits the blockbuster at the expense of both sellers (who sell cheap) and buyers (who pay inflated prices). Distinguish from steering (directing buyers) — blockbusting targets sellers.
Related Terms
More Fair Housing & Law Terms
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