Leasing License Practice Exam

What is the term for the practice of inducing someone to lease or purchase by misrepresenting the neighborhood's ethnic makeup?

1. Redlining

2. Blockbusting

3. Steering

4. Segregation

The correct answer is: Blockbusting

The correct term for the practice of inducing someone to lease or purchase by misrepresenting the neighborhood's ethnic makeup is blockbusting. This term refers to a strategy used by real estate agents and agencies, primarily in the mid-20th century, whereby they would create panic among homeowners by suggesting that racial minorities were moving into a neighborhood, causing property values to decline. This practice would then encourage homeowners to sell their properties at lower prices, which the agents would subsequently sell to new buyers at inflated prices. Blockbusting is particularly problematic as it exploits racial fears and contributes to racial discrimination in housing markets, adversely affecting communities and population diversity. The manipulation of buyers' perceptions about a neighborhood's demographics for profit not only disrupts local communities but also perpetuates systemic inequalities. In contrast, redlining refers to the practice of denying services, typically financial ones, to residents of certain areas based on their racial or ethnic composition, rather than actively inducing transactions as in blockbusting. Steering involves guiding potential buyers towards or away from certain neighborhoods based on their race, while segregation denotes the separation of groups in society, particularly in terms of race, but does not pertain specifically to the leasing or purchasing practices described in the question.