Blockbusting

Blockbusting is certain real estate dealers' practice of using racial scare tactics to persuade whites to sell their homes, buying them themselves, and then reselling the properties to African Americans. Blockbusting accounted for much of the racial succession and segregation in private housing in American cities during the 20th century. In the decades after World War II, the speed and scale of blockbusting made it seem that white urbanites were participating in massive “white flight.” Blockbusters, the real estate speculators who engineered the transfers, exploited both property sellers and buyers. White sellers frequently sold their property at a loss, while black buyers paid blockbusting intermediaries substantially more than the previous owners had sold for. Despite the inflated resale prices, the financial losses whites suffered from blockbusting fed the perception that blacks lowered property values.

The word blockbusting came into popular use in the late 1950s, when African Americans resumed the interwar Great Migration and sought housing in increasingly crowded urban centers. During the blitz of London in World War II, the word blockbuster described aerial bombs that destroyed whole blocks; white Americans' sense that the arrival of blacks doomed a community was reflected by their adoption of the wartime metaphor. The term panic peddling, which emphasizes the psychological state of the property owner rather than the geography of the sale, was used synonymously.

Real estate speculators in Harlem who realized that black urbanites desperately needed housing pioneered the practice that later became known as blockbusting. Even before African Americans crowded into cities like New York and Chicago in the tens of thousands in the 1910s, real estate dealers understood that they could profit from whites' distaste for African American neighbors. After moving one or two black families into a block, they could persuade white homeowners to sell their properties at reduced prices and introduce more African American residents. The existence of separate housing markets for whites and blacks enabled the creation of expensive, crowded ghetto neighborhoods from which African Americans were eager to escape.

In the years after World War II, blockbusting became one of the primary methods by which African Americans purchased homes in Northern cities. Blockbusters worked by reinforcing whites' racist beliefs about the damage created by the presence of African Americans in the neighborhood. The first step in busting a block was advising incumbents that blacks' arrival was imminent. Blockbusters directly solicited property owners by mail and telephone, while also arranging for African Americans to promenade on targeted blocks and call white homeowners in the middle of the night. They told potential sellers that the first homeowner on a block to sell could receive a “market rate” price, but that subsequent sellers would be grateful to sell at any price. Once a blockbuster made a purchase on a block and enabled a black family to move in, remaining white residents sold out rapidly, for everdecreasing prices. The less blockbusters paid for these homes, the greater their profits when they resold them to African Americans. Blockbusters also retained some properties and rented them to blacks who could not afford to purchase a home. Because federal policy discouraged banks from issuing mortgages in black neighborhoods until the late 1960s, African American buyers financed their properties with large cash down payments and unorthodox lending methods such as contract sales (in which late or missed payments could result in the prompt repossession of the property by the blockbuster, because buyers did not gain title to the property until they paid off the entire loan).

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