Real Estate Principles 1 Practice Exam

Blockbusting is the practice of manipulating homeowners into panicking that a racial or ethnic change in the neighborhood will drive down property values, prompting them to sell quickly and often below market value. Real estate agents or developers use this fear to buy these homes cheaply and then resell at higher prices to new buyers, profiting from the rapid turnover. This discriminatory tactic exploits residents’ concerns about neighborhood change and is illegal under fair housing laws. By contrast, redlining involves denying loans based on location, disinvestment refers to pulling out investments from an area, and gentrification is the process of wealthier residents moving in and raising costs, not the panic-selling manipulation described here.