Blockbusting

Blockbusting was outlawed as part of the Fair Housing Act, specifically 42 U.S.C. 3604(e), which prohibits the attempt to:

“[I]nduce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, handicap, familial status, or national origin.”

The following excerpt expands on the idea of “blockbusting:”

“Blockbusting”, or “panic peddling”, is not the same as panic selling. Blockbusting refers to the practice of directly inducing or persuading an individual to sell his home by representations as to the entry into his neighborhood of blacks or other minority groups. Panic selling is a broader problem which, although it may be prompted by blockbusting practices, does not depend upon direct inducements or face-to-face contact between people. Panic selling occurs when a resident who is otherwise disposed to remain in a neighborhood succumbs to any one or more of a number of pressures to move out when it appears that a minority racial group is beginning to enter. Among the fears of white residents as non-whites begin to move into their neighborhood are rising crime rates, overcrowded schools, declining property values, and a generally lower quality of life. As neighbors move away, there is also the feeling of being left behind, giving rise to the commonly-expressed fear, independent from any intrinsic hostility toward the incoming racial group, of being “the last white family on the block”. Where these fears persist and intensify, panic selling generally occurs on a wide scale….The constitutionality of “blockbusting laws” is now beyond question.[1] 

[1] Barrick Realty, Inc. v. City of Gary, Ind., 354 F. Supp. 126, 134-35 (N.D. Ind. 1973) aff'd, 491 F.2d 161 (7th Cir. 1974).