Blockbusting Term Analysis

Within six years the population of East Palo Alto was 82 percent black. Conditions deteriorated as African Americans who had been excluded from other neighborhoods doubled up in single-family homes. Their East Palo Alto houses had been priced so much higher than similar properties for whites that the owners had difficulty making payments without additional rental income. Federal and state housing policy had created a slum in East Palo Alto.

The director of the Federal Housing Administration supported Tenerowicz, stating that the presence of African Americans in the area would threaten property values of nearby residents. Foreman was forced to resign. The Federal Works Agency then proposed a different project for African Americans on a plot that the Detroit Housing Commission recommended, in an industrial area deemed unsuitable for whites. It soon became apparent that this site, too, would provoke protests because it was not far enough away from a white neighborhood. First Lady Eleanor Roosevelt protested to the president. The FWA again reversed course and assigned African Americans to the Sojourner Truth project. Whites in the neighborhood rioted, leading to one hundred arrests (all but three were African Americans) and thirty-eight hospitalizations (all but five were African Americans).

The full cycle went like this: when a neighborhood first integrated, property values increased because of African Americans’ need to pay higher prices for homes than whites. But then property values fell once speculators had panicked enough white homeowners into selling at deep discounts.
Falling sale prices in neighborhoods where blockbusters created white panic was deemed as proof by the FHA that property values would decline if African Americans moved in. But if the agency had not adopted a discriminatory and unconstitutional racial policy, African Americans would have been able, like whites, to locate throughout metropolitan areas rather than attempting to establish presence in only a few blockbusted communities, and speculators would not have been able to prey on white fears that their neighborhoods would soon turn from all white to all black.