Blockbusting
Encyclopedia
Blockbusting is a business practice of U.S. real estate agents and building developers meant to encourage white property owners to sell their houses at a loss, by implying that racial, ethnic, or religious minorities — Blacks
African American
African Americans are citizens or residents of the United States who have at least partial ancestry from any of the native populations of Sub-Saharan Africa and are the direct descendants of enslaved Africans within the boundaries of the present United States...

, Hispanics, Jews et al. — were moving into their previously racially segregated
Racial segregation
Racial segregation is the separation of humans into racial groups in daily life. It may apply to activities such as eating in a restaurant, drinking from a water fountain, using a public toilet, attending school, going to the movies, or in the rental or purchase of a home...

 neighborhood, thus depressing real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...

 property values. Blockbusting became possible after the legislative dismantling of legally protected racially segregated real estate practices after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

, but by the 1980s it largely disappeared as a business practice after changes in law and the real estate market.

Background

Beginning around 1900, with the Great Migration
Great Migration (African American)
The Great Migration was the movement of 6 million blacks out of the Southern United States to the Northeast, Midwest, and West from 1910 to 1970. Some historians differentiate between a Great Migration , numbering about 1.6 million migrants, and a Second Great Migration , in which 5 million or more...

 (1915–30) of black Americans from the rural Southern United States
Southern United States
The Southern United States—commonly referred to as the American South, Dixie, or simply the South—constitutes a large distinctive area in the southeastern and south-central United States...

 to work in the cities and towns of the northern U.S., many white people feared that black people were a social and economic threat, and countered their presence with local zoning
Zoning
Zoning is a device of land use planning used by local governments in most developed countries. The word is derived from the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another...

 laws requiring them to live and reside in geographically defined areas of the town or city, preventing them from moving to areas inhabited by white people.

In 1917, in the case of Buchanan v. Warley
Buchanan v. Warley
Buchanan v. Warley, 245 U.S. 60 was a unanimous United States Supreme Court decision addressing civil government instituted racial segregation in residential areas. The Court held that a Louisville, Kentucky, city ordinance prohibiting the sale of real property to African Americans violated the...

(1917), the Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...

 voided the racial residency statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...

s forbidding blacks from living in white neighborhoods, as violating the Equal Protection Clause
Equal Protection Clause
The Equal Protection Clause, part of the Fourteenth Amendment to the United States Constitution, provides that "no state shall ... deny to any person within its jurisdiction the equal protection of the laws"...

 of the Fourteenth Amendment
Fourteenth Amendment to the United States Constitution
The Fourteenth Amendment to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments.Its Citizenship Clause provides a broad definition of citizenship that overruled the Dred Scott v...

 to the United States Constitution
United States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...

. In turn, whites used racially restrictive covenant
Restrictive covenant
A restrictive covenant is a type of real covenant, a legal obligation imposed in a deed by the seller upon the buyer of real estate to do or not to do something. Such restrictions frequently "run with the land" and are enforceable on subsequent buyers of the property...

s in deed
Deed
A deed is any legal instrument in writing which passes, or affirms or confirms something which passes, an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions sealed...

s, and real estate businesses informally applied them to prevent the selling of houses to black Americans in white neighborhoods. To thwart the Supreme Court’s Buchanan v. Warley prohibition of such legal business racism, state courts interpreted the covenants as a contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

 between private persons, outside the scope of the Fourteenth Amendment; however, in the Shelley v. Kraemer
Shelley v. Kraemer
Shelley v. Kraemer, 334 U.S. 1 , is a United States Supreme Court case which held that courts could not enforce racial covenants on real estate.-Facts of the case:...

(1948) case, the Supreme Court ruled that the Amendment’s Equal Protection Clause outlawed the states’ legal enforcement of racially restrictive covenants in state courts. In this event, decades of racist
Racism
Racism is the belief that inherent different traits in human racial groups justify discrimination. In the modern English language, the term "racism" is used predominantly as a pejorative epithet. It is applied especially to the practice or advocacy of racial discrimination of a pernicious nature...

 laws which compelled black Americans to live in over-crowded and over-priced ghetto
Ghetto
A ghetto is a section of a city predominantly occupied by a group who live there, especially because of social, economic, or legal issues.The term was originally used in Venice to describe the area where Jews were compelled to live. The term now refers to an overcrowded urban area often associated...

s created economic pressures to avail black people of housing in racially segregated neighborhoods were annulled. Freed by the Supreme Court from the legal restrictions against selling white housing to blacks, real estate companies sold houses to those who could buy — if they could find a willing white seller.

Generally, “blockbusting” denotes the real estate and building development business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

 practices yielding double profits from U.S. anti-black racism; aggravating, by subterfuge, the white home owners’ fears of mixed-race communities to encourage them to quickly sell their houses at a loss, at below-market prices, and then selling that property to black Americans at higher-than-market prices. Given then-standard banking criteria for mortgage-lending, black people usually did not qualify for mortgages
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...

 from bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s and savings and loan association
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...

s; instead, they recurred to land installment contracts
Land contract
A 'land contract' is a contract between a seller and buyer of real property in which the seller provides financing to buy the property for an agreed-upon purchase price and the buyer repays the loan in installments...

 at above market interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....

 rates to buy a house — a racist economic strategy eventually leading to foreclosure. With blockbusting, real estate companies legally profited from the arbitrage
Arbitrage
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...

 (the difference between the discounted price paid to frightened white sellers and the artificially high price paid by black buyers), and from the commissions resulting from increased real estate sales, and from their higher than market financing of said house sales to black Americans. The documentary film Revolution '67
Revolution '67
Revolution '67 is a 2007 documentary film about the black rebellions of the 1960s. With the philosophy of nonviolence giving way to the Black Power Movement, race riots were breaking out in Jersey City, Harlem, and Watts, Los Angeles. In 1967, black Newark taxi driver John Smith was arrested for a...

(2007) examines the blockbusting practiced in Newark, New Jersey
Newark, New Jersey
Newark is the largest city in the American state of New Jersey, and the seat of Essex County. As of the 2010 United States Census, Newark had a population of 277,140, maintaining its status as the largest municipality in New Jersey. It is the 68th largest city in the U.S...

 in the 1960s.

Methods

The term “blockbusting” might have originated in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...

, where, in order to accelerate the emigration of economically successful racial, ethnic, and religious minority residents to better neighborhoods beyond the ghettos, real estate companies and building developers used agents provocateurs
Agent provocateur
Traditionally, an agent provocateur is a person employed by the police or other entity to act undercover to entice or provoke another person to commit an illegal act...

— non-white people hired to deceive the white residents of a neighborhood into believing that black people were moving into the neighborhood, thereby encouraging them to quickly sell (at a loss) and emigrate to generally more racially homogeneous suburbs.

The tactics included hiring black women to be seen pushing baby carriages in white neighborhoods, so encouraging white fear of devalued property; selling a house to a black family in a white neighborhood to provoke white flight
White flight
White flight has been a term that originated in the United States, starting in the mid-20th century, and applied to the large-scale migration of whites of various European ancestries from racially mixed urban regions to more racially homogeneous suburban or exurban regions. It was first seen as...

, before the community’s properties decline considerably; selling white neighborhood houses to black families, and afterwards placing real estate agent business cards in the neighbors’ mailboxes; and saturating the neighborhood area with fliers offering quick-cash for houses. Like-wise, building developers bought houses and dwelling buildings, and left them unoccupied to make the neighborhood appear abandoned — like a ghetto
Ghetto
A ghetto is a section of a city predominantly occupied by a group who live there, especially because of social, economic, or legal issues.The term was originally used in Venice to describe the area where Jews were compelled to live. The term now refers to an overcrowded urban area often associated...

 or a slum
Slum
A slum, as defined by United Nations agency UN-HABITAT, is a run-down area of a city characterized by substandard housing and squalor and lacking in tenure security. According to the United Nations, the percentage of urban dwellers living in slums decreased from 47 percent to 37 percent in the...

 — psychologic coercion that usually forced the remaining white residents to sell at a loss. Blockbusting was a very common and very profitable form of racist exploitation, for example, by 1962, when blockbusting had been practiced for some fifteen years, the city of Chicago had more than 100 real estate companies that had been, on average, “changing” between two to three blocks a week for years.

Reactions

In 1962, “blockbusting” — real estate profiteering — was nationally exposed by The Saturday Evening Post
The Saturday Evening Post
The Saturday Evening Post is a bimonthly American magazine. It was published weekly under this title from 1897 until 1969, and quarterly and then bimonthly from 1971.-History:...

with the article "Confessions of a Block-Buster", wherein the author detailed the practices, emphasizing the surplus profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...

 gained from frightening white people to sell at a loss, in order to quickly resettle in racially segregated "better neighborhoods". In response to political pressure from the cheated sellers and buyers, states and cities legally restricted door-to-door real estate solicitation, the posting of "FOR SALE" signs, and authorized government licensing agencies to investigate the blockbusting complaints of buyers and sellers, and to revoke the real estate sales licenses of blockbusters. Like-wise, other states' legislation allowed lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...

s against real estate companies and brokers who cheated buyers and sellers with fraudulent
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 representations of declining property values, changing racial and ethnic neighborhood populations, local crime, and the "worsening" of schools, because of race mixing.

The Fair Housing Act of 1968
Civil Rights Act of 1968
On April 11, 1968 U.S. President Lyndon B. Johnson signed the Civil Rights Act of 1968, also known as the Indian Civil Rights Act of 1968. Title VIII of the Civil Rights Act of 1968 is commonly known as the Fair Housing Act, or as CRA '68, and was meant as a follow-up to the Civil Rights Act of 1964...

 established federal causes of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...

 against blockbusting, including illegal real estate broker claims that blacks, Jews, Hispanics, et al. had or were going to move into a neighborhood, and so devalue the properties. In the case of Jones v. Alfred H. Mayer Co.
Jones v. Mayer
Jones v. Alfred H. Mayer Co., 392 U.S. 409 , is a United States Supreme Court case which held that Congress could regulate the sale of private property in order to prevent racial discrimination: " bars all racial discrimination, private as well as public, in the sale or rental of property, and that...

(1968), the U.S. Supreme Court ruled that the Thirteenth Amendment
Thirteenth Amendment to the United States Constitution
The Thirteenth Amendment to the United States Constitution officially abolished and continues to prohibit slavery and involuntary servitude, except as punishment for a crime. It was passed by the Senate on April 8, 1864, passed by the House on January 31, 1865, and adopted on December 6, 1865. On...

 authorized the federal government's prohibiting racial discrimination in private housing markets, thus allowing black American legal claims
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...

 to rescind the usurious land contracts (featuring over-priced houses and higher-than-market mortgage interest rates), as a racist real estate business practice illegal under the Civil Rights Act of 1866
Civil Rights Act of 1866
The Civil Rights Act of 1866, , enacted April 9, 1866, is a federal law in the United States that was mainly intended to protect the civil rights of African-Americans, in the wake of the American Civil War...

, which greatly reduced the profitability of blockbusting. Nevertheless, said regulatory and statutory remedies against blockbusting were challenged in court; thus, towns cannot prohibit an owner's placing a "FOR SALE" sign before his house, in order to reduce blockbusting. In the case of Linmark Associates, Inc. v. Willingboro
Linmark Associates, Inc. v. Willingboro
Linmark Associates, Inc., v. Township of Willingboro, 431 U.S. 85 , was a case in which the Supreme Court of the United States found that an ordinance prohibiting the posting of "for sale" and "sold" signs on real estate within the town violated the First Amendment to the United States Constitution...

(1977), the Supreme Court ruled that such prohibitions infringe freedom of expression
Freedom of speech
Freedom of speech is the freedom to speak freely without censorship. The term freedom of expression is sometimes used synonymously, but includes any act of seeking, receiving and imparting information or ideas, regardless of the medium used...

. Moreover, by the 1980s, as evidence of blockbusting practices disappeared, states and cities began rescinding statutes restricting blockbusting.

Popular culture

The serio-comic television series All in the Family
All in the Family
All in the Family is an American sitcom that was originally broadcast on the CBS television network from January 12, 1971, to April 8, 1979. In September 1979, a new show, Archie Bunker's Place, picked up where All in the Family had ended...

(1971–79), featured "The Blockbuster", a 1971 episode about the practice, illustrating some real estate blockbusting techniques. One of the characters in An Education
An Education
An Education is a 2009 British coming-of-age drama film, based on an autobiographical article in Granta by British journalist Lynn Barber. The film was directed by Lone Scherfig from a screenplay by Nick Hornby, and stars Carey Mulligan as Jenny, a bright schoolgirl, and Peter Sarsgaard as David,...

, a 2009
2009 in film
The year 2009 saw the release of many films. Seven made the top 50 list of highest-grossing films, and the Academy of Motion Picture Arts and Sciences announced that as of this year, their Best Picture category would consist of ten nominees, rather than five .- Highest-grossing films :Please note...

 drama
Drama
Drama is the specific mode of fiction represented in performance. The term comes from a Greek word meaning "action" , which is derived from "to do","to act" . The enactment of drama in theatre, performed by actors on a stage before an audience, presupposes collaborative modes of production and a...

 film
Film
A film, also called a movie or motion picture, is a series of still or moving images. It is produced by recording photographic images with cameras, or by creating images using animation techniques or visual effects...

 set in the UK, makes his fortune through this practice.

See also

  • Black flight
    Black flight
    Black flight is a term applied to the out-migration of African Americans from predominantly black or mixed inner-city areas in the United States to suburbs and outlying edge cities of newer home construction...

  • Inclusionary zoning
    Inclusionary zoning
    Inclusionary zoning, also known as inclusionary housing, is an American term which refers to municipal and county planning ordinances that require a given share of new construction to be affordable by people with low to moderate incomes...

  • Institutional discrimination in the housing market
    Institutional discrimination in the housing market
    Charges of Institutional discrimination in the United States housing market hold that discrimination and segregation in the United States housing market have endured despite the condemnation of discriminatory practices. Institutionalized, or systematic, racism has been shown to occur even though...

  • Institutional racism
    Institutional racism
    Institutional racism describes any kind of system of inequality based on race. It can occur in institutions such as public government bodies, private business corporations , and universities . The term was coined by Black Power activist Stokely Carmichael in the late 1960s...

  • Mortgage discrimination
    Mortgage discrimination
    Mortgage discrimination or mortgage lending discrimination is the practice of banks, governments or other lending institutions denying loans to one or more groups of people primarily on the basis of race, ethnic origin, sex or religion...

  • Planned shrinkage
    Planned shrinkage
    Planned shrinkage is a public policy, practiced most notably in the 1970s in New York City, of withdrawing essential city services from neighborhoods suffering from urban decay, crime, and poverty so that neighborhoods may be claimed by outside interests for new development...

  • Racism
    Racism
    Racism is the belief that inherent different traits in human racial groups justify discrimination. In the modern English language, the term "racism" is used predominantly as a pejorative epithet. It is applied especially to the practice or advocacy of racial discrimination of a pernicious nature...

  • Redlining
    Redlining
    Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas. The term "redlining" was coined in the late 1960s by John McKnight, a...

  • Urban renewal
    Urban renewal
    Urban renewal is a program of land redevelopment in areas of moderate to high density urban land use. Renewal has had both successes and failures. Its modern incarnation began in the late 19th century in developed nations and experienced an intense phase in the late 1940s – under the rubric of...

  • White flight
    White flight
    White flight has been a term that originated in the United States, starting in the mid-20th century, and applied to the large-scale migration of whites of various European ancestries from racially mixed urban regions to more racially homogeneous suburban or exurban regions. It was first seen as...


Further reading

  • Orser, W. Edward. (1994) Blockbusting in Baltimore: The Edmondson Village Story (Lexington: The University Press of Kentucky)
  • Pietila, Antero. (2010) Not in My Neighborhood: How Bigotry Shaped a Great American City (Chicago: Ivan R. Dee).
  • Seligman, Amanda I. (2005) Block by Block: Neighborhoods and Public Policy on Chicago's West Side (Chicago: University of Chicago Press).
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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