Blockbusting is a discriminatory housing practice which has been banned in many regions of the world, although documented instances of blockbusting continue to occur. Several steps are involved in blockbusting, with the ultimate result of driving one group of people out of a neighborhood and replacing them with another. Blockbusting often plays on fear and racially-fraught emotions to manipulate people, and some people argue that the technique has become less effective as people are more open to integrated communities.
Most classic examples of blockbusting come from white neighborhoods in the United States. In a typical blockbusting scenario, a realtor would steer a black family into a white neighborhood, and perhaps sell them a home at a discounted price. Then, the realtor would paper the neighborhood with flyers, suggesting that more blacks would be moving in, and offering to buy homes for cash, at a discount, so that white homeowners could move quickly. Then, the homes would be sold to more members of the black community, typically at inflated prices.
This practice is harmful in a number of ways. In the first place, it hurts the families who are forced to leave through the use of fear tactics, because their homes lose value, and they may take a loss. People who choose to remain behind may find themselves subjected to intimidation tactics, such as leaving homes empty to create an abandoned feel in the neighborhood, driving prices down even further.
For the community moving in, blockbusting exposes people to inflated housing prices and predatory lending. Historically, blockbusting often walked hand in hand with racist practices at banks and title companies, so black families would be forced into ridiculous mortgages if they wanted to buy real estate. Often, the mortgage would be rigged to promote foreclosure, allowing the realtor to swoop back in again, buy the home, and sell it at a profit.
Blockbusting directly contributed to white flight in many American cities, as white families left their neighborhoods in fear of an influx of minorities. Many neighborhoods also went into steep decline, thanks to practices like leaving houses empty and encouraging foreclosure, and some very fine old neighborhoods were destroyed through blockbusting practices. Ironically, in some areas, blockbusting has come full circle, as whites move back into ethnic neighborhoods, gentrify them, and drive property prices up so that minorities cannot afford to live there anymore.