Blockbusting

Blockbusting was a practice used by real estate agents and developers in the United States to encourage white property owners to sell their homes by giving the impression that minority groups (such as African Americans) were moving into their previously racially segregated neighborhood.William Dennis Keating (1994). " [http://books.google.com/books?id=O0bnHQAACAAJ The Suburban Racial Dilemma: Housing and Neighborhoods] ". ISBN 1566391474] Blockbusting became possible following the dismantling of legal protection of segregated real estate practices following World War II, but by the 1980s it disappeared as a result of changes in law and the real estate market.cite journal|last=Mehlhorn|first=Dmitri|authorlink= |title=A Requiem for Blockbusting: Law, Economics, and Race-Based Real Estate Speculation|journal=Fordham Law Review|volume=67|issue=|pages=1145–1161|publisher= |location= |date=December 1998|url= |doi= |id= |accessdate= ]

Background

Beginning around 1900, with the migration of African Americans from the rural South to towns and cities, whites feared that blacks represented a social and economic threat, which required blacks to reside in defined areas and be prevented from moving into areas inhabited by whites. Initial attempts to forbid by statute the movement of blacks into city blocks that were occupied by whites were struck down by the Supreme Court in the 1917 case of "Buchanan v. Warley" as a violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. ["Buchanan v. Warley", 245 U.S. 60 (1917).] Local groups of whites then used racially restrictive covenants in deeds and informal rules among real estate agents to prevent sales of residential property to blacks in white neighborhoods. While the "Buchanan" case prohibited state action, the use of restrictive covenants was viewed as a contract between private individuals not within the scope of the Fourteenth Amendment. However, in 1948 the Supreme Court later ruled in "Shelley v. Kraemer" that the same Equal Protection Clause of the Fourteenth Amendment did not allow the enforcement of racially restrictive covenants in state courts. ["Shelley v. Kraemer", 334 U.S. 1 (1948).]

The results of decades of restrictions requiring blacks to live in crowded ghettos had resulted in them paying higher prices for lower quality housing than in nearby white neighborhoods, creating economic pressures to free up additional white housing areas to satisfy this unmet demand. Freed from legal restrictions against the sale of previously segregated real estate, blacks could now move into white neighborhoods if they could find a willing seller. Blockbusting in general refers to practices of real estate agents and developers designed, by using the fears and prejudice of whites, to encourage whites to quickly sell their homes at below-market prices and then charge higher prices for the same housing to blacks. Because discriminatory lending practices often prevented blacks from obtaining housing loans from savings and loan associations or banks, blacks often had to finance their transactions with land installment contracts at usurious interest rates, sometimes leading to foreclosure. Speculators using blockbusting techniques profited on the arbitrage between the discounted selling price paid to white sellers and the artificially high price paid by black buyers, from the commissions resulting from the increased turnover in real estate sales, and from the financing of the sales to blacks.

The film "Revolution '67" examines the practice of blockbusting that occurred in Newark, New Jersey in the 1960s.

Methods

The term may have originated in Chicago, where, in order to accelerate the out-migration of economically successful residents to better neighborhoods outside ghettos, people were hired to create a visual presence in the restricted neighborhoods, encouraging residents to sell their properties and move to still more restrictive suburbs. For example, black women might be paid to push baby carriages in exclusive white neighborhoods to encourage white residents to sell their properties, on the premise that property values would decline with an increase in the visible social differences that characterized neighboring ghettos. In other cases, one house in a segregated block might be sold cheaply to a black family, causing fears that others would soon move in.

In a variation, a real-estate agent would refer African-American families interested in buying a home to a particular neighborhood that, while mostly white, was less expensive than other neighborhoods. Even prosperous black families were steered to the targeted neighborhood. When a black family bought a house, the broker would then place business cards in the mailboxes of neighboring houses or blanket the area with fliers offering to buy houses quickly for cash. A developer may also buy properties in a neighborhood and leave them empty, to give the neighborhood an empty feeling to encourage white holdouts to sell to him.

Blockbusting tactics proved highly profitable and became widespread. For example, by 1962, when blockbusting had been in practice for fifteen years, Chicago had over 100 operators and had been "changing" an average of two to three blocks a week for several years.

Reactions

Blockbusting sprang upon the national conscious as a result of a 1962 "The Saturday Evening Post" article entitled "Confessions of a Block-Buster", which detailed the practices in graphic terms and emphasized the fact that whites lost value in their homes and were forced to resettle. In response to political pressure, states and cities passed laws restricting door-to-door real estate solicitation, the posting of "for sale" signs, and allowed real estate licensing agencies to investigate and revoke the licenses of brokers who used blockbusting techniques.. Other states passed legislation creating causes of action for fraudulent representations of declining property values, changing racial or ethnic composition of neighborhoods or criminal activity, or worsening schools. The federal Fair Housing Act of 1968 created causes of action for blockbusting including unlawful claims that persons of a particular race or ethnic group had or were going to move into a neighborhood. The Supreme Court in the 1968 court case "Jones v. Alfred H. Mayer Co." that the Thirteenth Amendment to the United States Constitution authorized the government to prohibit discrimination in private housing markets, ["Jones v. Alfred H. Mayer Co.", 392 U.S. 409 (1968).] allowing blacks in later cases to rescind land contracts with excessive housing prices and interest rates as a discriminatory practice unlawful under the Civil Rights Act of 1866. These actions took much of the profit from blockbusting.

Some of the regulatory and statutory responses to blockbusting have been attacked in the courts. For example, courts have ruled that towns cannot prohibit the placing of outdoor "for sale" signs by homeowners to reduce the effect of blockbusting. The Supreme Court ruled in the 1977 case of "Linmark Associates, Inc. v. Willingboro" that these prohibitions infringe upon the freedom of expression. ["Linmark Associates, Inc. v. Willingboro", 431 U.S. 85 (1977).] Beginning in the 1980s, as evidence of blockbusting practices disappeared, states and cities began rescinding statutes that had restricted blockbusting practices.

ee also

*Black flight
*Inclusionary zoning
*Institutional discrimination in the housing market
*Institutional racism
*Mortgage discrimination
*Planned shrinkage
*Racism
*Urban renewal
*White flight

References

Further reading

*Orser, W. Edward. (1994) "Blockbusting in Baltimore: The Edmondson Village Story" (Lexington: The University Press of Kentucky)
*Seligman, Amanda I. (2005) "Block by Block: Neighborhoods and Public Policy on Chicago's West Side" (Chicago: University of Chicago Press).

External links

* http://www.encyclopedia.chicagohistory.org/pages/147.html