Difficulty: Easy

Average Score: 87%

Which of the following situations is an example of blockbusting?

Rationale

A licensee urges homeowners to sell before members of a certain ethnic group move into the neighborhood.

Blockbusting is a practice where real estate agents manipulate homeowners' fears about changes in neighborhood demographics to prompt them to sell their homes at lower prices. By urging homeowners to sell before a particular ethnic group moves in, agents exploit racial prejudices to generate profit, which is a quintessential example of blockbusting.

A (A licensee urges homeowners to sell before members of a certain ethnic group move into the neighborhood.) CORRECT

This choice exemplifies blockbusting, as it involves a licensee instigating urgency among homeowners to sell based on fears of demographic change, thus manipulating the housing market for profit.

B (A licensee directs prospective buyers only to properties owned by others of the same race.) YOUR ANSWER

This scenario represents racial steering, which is the practice of guiding buyers based on race. While discriminatory, it does not involve the manipulation of homeowners to sell their properties based on fear, which is the essence of blockbusting.

C (A lending institution buys all of the houses on a block.) YOUR ANSWER

This choice describes an action that may reflect market speculation or investment strategy rather than blockbusting. It does not involve instigating fear among homeowners or exploiting racial tensions, which are central to blockbusting practices.

D (A lending institution adheres to a blanket policy of refusing to make mortgage loans on any property in a particular neighborhood.) YOUR ANSWER

This scenario exemplifies redlining, a discriminatory practice where lenders deny loans based on geographic location, typically affecting racial minorities. While harmful, it does not fit the definition of blockbusting, which focuses on encouraging sales through fear of changing demographics.

Conclusion

Blockbusting is characterized by exploiting homeowners' fears regarding racial or ethnic changes in their neighborhoods to induce them to sell. The correct answer, urging homeowners to sell before certain groups move in, encapsulates this practice. Other options illustrate different forms of discrimination or market behavior but do not align with the manipulative tactics inherent to blockbusting. Understanding these distinctions is crucial in recognizing and combating discriminatory practices in real estate.

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