What is blockbusting in real estate?

Blockbusting is a real estate practice where agents or developers induce panic selling among property owners by predicting demographic shifts, typically relating to race or socio-economic status. This tactic often involves suggesting that certain groups are moving into a neighborhood, which prompts existing homeowners to sell their properties quickly, often at lower prices. The underlying goal is to acquire these properties at depressed prices and then resell them at a profit once the neighborhood transitions.

This practice is unethical and illegal in many jurisdictions because it exploits the fears of homeowners and perpetuates racial segregation and discrimination. Understanding this concept is crucial in real estate and risk management to ensure fair housing practices and to protect communities from the harmful effects of such tactics.