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67 Fordham L. Rev. 1145 (1998-1999)
A Requiem for Blockbusting: Law, Economics, and Race-Based Real Estate Speculation

handle is hein.journals/flr67 and id is 1161 raw text is: A REQUIEM FOR BLOCKBUSTING: LAW, ECONOMICS, AND RACE-BASED REAL ESTATE SPECULATION Dmitri Mehlhorn* INTRODUCTION Blockbusting and panic peddling are real estate practices in which brokers encourage owners to list their homes for sale by exploiting fears of racial change within their neighborhood. Panic peddling and blockbusting did occur in Chicago during the 1960s and early 1970s. However, blockbusting and panic peddling rarely, if ever, occur in Illinois today.' W ITH these words, an Illinois district court appeared to recognize the end of an era. For nearly two decades, beginning in the late 1950s, real estate speculators known as blockbusters profited hand- somely from racial turnover in real estate markets by buying homes from urban whites and reselling them at inflated prices to blacks, or merely from the commissions available in a high-turnover market.' During this period, blockbusters were national pariahs; whites hated them for dismantling their cozy neighborhoods,' progressives hated them for harming blacks,4 and newspapers and government reports blamed them for destroying neighborhoods and fostering racial ten- sion.5 By the end of the 1960s, governments at the local, state, and federal level had passed legislation designed to stop blockbusting.6 Two decades later, blockbusting appears to have disappeared from the national consciousness. Published sources rarely mention the term, except to state that the practice has vanished.7 Legal academia, in particular, has ignored blockbusting's plateau and disappearance; the most recent law review article on blockbusting appeared over * B.A., Stanford University, 1992; M.P.P., Harvard University Kennedy School of Government, 1995; J.D., Yale Law School, 1998. Thanks especially to Ian Ayres, and also to Bob Ellickson, Gail Horwitz, Erez Kalir, Jay Koh, Allison Moore, Bob Solomon, and Avital Zer-Ilan for their extensive and helpful comments. Thanks also to Richard Sander for helping me get started. 1. Pearson v. Edgar, 965 F. Supp. 1104, 1108-09 (N.D. I11. 1997) (citations omitted). 2. See infra notes 36-43 and accompanying text. 3. See infra notes 47-49 and accompanying text. 4. See infra notes 95-115 and accompanying text. 5. See infra notes 49-58 and accompanying text. 6. See infra notes 59-78 and accompanying text. 7. See infra notes 81-87 and accompanying text. 1145