Blockbusting is characterized by which of the following?

Blockbusting is characterized by the practice of encouraging homeowners to sell their properties by instilling fear that a minority group is moving into the neighborhood, which may lower property values. This tactic relies on exploiting prejudices and manipulating community members into believing that the demographic shift will adversely affect their investment. The practice is both unethical and illegal under fair housing laws, which aim to prevent discrimination based on race, color, religion, sex, national origin, disability, and familial status.

The other options outlined involve different illegal or unethical practices but do not specifically define blockbusting. Price fixing among competitors relates to collusion in establishing prices, which undermines fair market competition. Refusal to lend based on area demographics pertains to redlining, a discriminatory practice in lending, and providing illegal incentives for transactions involves offering bribes or rewards that violate ethical standards in real estate transactions. These actions are also prohibited but are distinct from blockbusting, which is focused on manipulating property sales through racial or ethnic fear tactics.