What does the prohibited fair housing practice of blockbusting involve?
Blockbusting is panic peddling—inducing homeowners to sell their properties by claiming that a protected class is moving into the neighborhood.
Also known as panic selling, blockbusting involves convincing owners to sell cheaply due to fear of changing neighborhood demographics, then reselling those homes to minority buyers at higher prices.
Texas Property Code §301.025 & TREC Rule §531.19— Texas Fair Housing Act & Discriminatory Practices
Select Your Answer Choice
Exam Explanation
What is Blockbusting in Real Estate?
Blockbusting is an unethical, illegal practice designed to exploit racial fears and prejudices for financial profit. It was outlawed by the Fair Housing Act of 1968.
Why the Correct Option is Right
Option B is correct because blockbusting (or panic peddling) is specifically defined as soliciting listings by telling current owners that a demographic shift (e.g., race, religion, national origin) will cause property values to crash, school systems to decline, or crime to rise.
Why the Other Options are Traps
- Option A is a trap because assembling parcels of land for commercial development is a standard business practice called “assemblage.”
- Option C is a trap because financial screening is legal and encouraged.
- Option D is a trap because zoning and block reconfiguration are local municipal acts, not Fair Housing violations.
The Exam Trap
On the exam, blockbusting is often paired with “steering” and “redlining.” Remember: Blockbusting targets sellers (convincing them to sell out of fear), Steering targets buyers (directing them where to live), and Redlining targets borrowers (lenders refusing loans to specific areas).
Worked Texas Example
Scenario: Agent Frank goes door-to-door in a suburban Houston neighborhood. He tells the residents: “You should sell your house to me now before the new low-income housing project down the street is completed and your home value drops 30%.” Outcome: Frank is guilty of blockbusting. He attempted to induce panic selling based on class/racial profiling, which violates fair housing laws and TREC rules.