What are steering and blockbusting in the context of fair housing, and how do these practices harm consumers and violate fair housing law?

Fair Housing & Ethics on the Real Estate Exam

Steering and blockbusting are particularly insidious forms of discrimination because they operate through subtle suggestions and psychological pressure rather than outright refusal. Real estate agents may engage in these practices unintentionally, based on assumptions about client preferences, market conditions, or neighborhood demographics. Agents must actively avoid these practices in interactions with all clients and customers, and must be aware of their own unconscious biases that may lead to steering. These practices undermine fair housing and perpetuate residential segregation, affecting property values, community integration, and individual opportunity.

Understanding Fair Housing & Ethics: Key Concepts

Steering occurs when a real estate agent directs buyers or renters toward or away from particular neighborhoods based on the buyer's or renter's protected class status. Steering can be direct and obvious ("that neighborhood is not right for your family") or subtle (selective showing of properties, describing neighborhoods in coded language, emphasizing crime statistics only in certain neighborhoods, or responding more enthusiastically to some neighborhood preferences than others). The intent or awareness of the agent does not determine whether steering occurs; the practice of directing clients based on protected class characteristics violates fair housing law regardless of motivation. For example, an agent who shows fewer properties in integrated neighborhoods to white buyers, or who emphasizes cultural institutions in minority neighborhoods to minority buyers, is steering. Steering may appear beneficial (e.g., suggesting a safe neighborhood) but violates fair housing law because it limits clients' choices based on race rather than on the client's stated preferences and circumstances.

Blockbusting, also called panic selling or scare tactics, is the practice of inducing homeowners to sell their property by creating fear about neighborhood changes, particularly racial or ethnic changes. Blockbusting typically involves representations that minorities are moving into the neighborhood, suggesting this will cause property values to decline, and offering to buy the property at below-market prices or to represent the owner in a sale. Blockbusting has been used historically to destabilize racially integrated or transitioning neighborhoods, generating rapid turnover and profit for speculators while causing community disruption and financial loss to homeowners. The Fair Housing Act specifically prohibits blockbusting, and HUD and state authorities prosecute this practice vigorously because of its severe impact on communities and homeowners. Blockbusting may involve both steering (directing buyers away from neighborhoods) and discriminatory advertising that encourages sales based on protected class concerns.

Both steering and blockbusting are forms of discrimination that operate through information and persuasion rather than outright refusal. They are illegal and unethical regardless of whether they result from explicit discrimination or from unconscious bias. Real estate professionals must actively prevent these practices through awareness of their own assumptions, consistent application of fair housing principles to all clients, and commitment to serving all communities with equal diligence and respect. Agents should offer all properties available that match a buyer's or renter's stated criteria, encourage clients to visit diverse neighborhoods, and refrain from commentary about neighborhoods based on demographics or changes.

Fair Housing & Ethics Rules by State

Each state has its own rules when it comes to fair housing & ethics. Here are a few examples of how requirements differ: