HGTV’s “My First Place”: Where are the Hazardous Content Warnings?

Lots of cable TV shows carry “adult content” warnings in the opening credits, to prepare us for violence and adult themes.   I think that “hazardous content” warnings need to used on some TV shows that feature people spending their money.

Last night I was walking on the treadmill while watching one of my favorite networks, HGTV.  I caught the last segments of a show called “My First Place.”  This series features young couples searching for then buying their first home.  I’m talking a really young couple in this episode, as in the guy looked like he should be shopping for his first razor, not his first house.  The gal still had that post-honeymoon glow.  So sweet.

These newlyweds were from Denver and wanted to live up in the mountains in sort of a lonely-looking community set in a wooded area.  They found a house (with the help of an eager Realtor) and eventually made an offer of $225,000.  The offer was accepted.  (That was close to the selling price of Mr. and Mrs. ToughMoneyLove’s first house, except that you have to move the decimal point to the left one position.)

The show follows the newlyweds to the hard truth part of a home purchase: the closing.  This is where I got upset.  As the closing began, the show host explained the details of the mortgage loan:  100% financing, interest only, 5-year adjustable rate.   I thought (actually I yelled out):  You have got to be kidding!  Do the show’s producers not watch the financial news on any of the other networks?

It actually got worse.  While the Realtor discussed the closing documents with this poor couple in a rapid fire fashion (hey – the less understood the better for getting the deal done), sub-titles were displayed on screen.  One of the sub-titles explained what an interest-only loan was.  To the show’s credit, we were told that with an interest-only mortgage, the loan principal amount was not being reduced.   But – not to worry – the next sub-title told us, this couple would build equity from appreciation in the value of house.  That was in interesting rationalization considering that residential housing values in Denver have actually been falling for some time.  Funny, I didn’t hear the Realtor mention that at the closing.

Then the show had these greenhorn home buyers explain why they chose an adjustable rate mortgage.  The purpose for the ARM, they said, was to keep their payments as low as possible, then they would re-finance to a fixed rate before the interest-rate adjusted.  Uh – where have we heard that before?  Would that be from the thousands of homeowners who have experienced foreclosure this year because their mortgage interest rate adjusted and were told they could not re-finance because they had negative equity?   

By the way, the starting interest rate on this ARM was 6.75%.  What kind of teaser rate is that?

So now I am thinking that a show producer who knows something about personal finance will close this episode with a warning to all younger viewers that what this couple did was extremely risky and therefore unwise.   Nope, nothing but scenes of the happy couple staring at their new home and planning where the new hot tub will go!  I wonder if the newlyweds were plotting to use a HELOC to pay for the hot tub?

My last hope was that this show was a repeat and had actually been first broadcast a couple of years ago.  So I went on the HGTV website and found the episode summary.  Nope – the show was brand new.  

HGTV lost credibility with me last night.  You would think that a network that is focused on being informative and authoritative in matters of real estate would not simply ignore all of the financing mistakes these young home buyers were making.  Even if the show was filmed before everything hit the fan in 2008, a little post-show warning would have been appropriate in light of everything that has transpired.

HGTV can still do something to partially compensate for its failure to present the reality of home financing in its “My First Place” series.  We need a new HGTV reality series.  It should be called “My First Foreclosure.”

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17 Responses to “HGTV’s “My First Place”: Where are the Hazardous Content Warnings?”
  1. junger says:

    I get so annoyed at watching those shows. My wife and I are going to be buying our first house (hopefully) within the next year, and seeing the couples with no down payments and poor advice from realtors kills me.

    The worst show is “My House is worth what?” where the realtors, without fail, tell homeowners that if they spend $X to fix something up in their house, they’ll double or triple their investment when they sell.

    When did people stop buying homes to live in them?

    • C2 says:

      It is even worse than that– Many of these shows (Sweat Equity in particular) present any renovations done to the home in terms of money earned. Yes, Mr. XYZ you just renovated your kitchen for $25,000 and went 5K over budget but this here real estate agent now says that your home is now worth 40 thousand dollars more than it was before and so, you just earned yourself $15,000 dollars. Lucky Mr. XYZ! There are four minor glitches in this equation– In order to actually get this money out of the home, you have to sell it for the final estimated price. The initial appraisal is more than or equal to what you actually paid for the house. Your renovations can not be devalued through time and use, and oh yeah, you should have the renovation money in the bank to begin with. How many people have faced foreclosures not because they could not afford their initial mortgage, but because they took equity out of their homes thinking that they could make a huge profit when they sold the house? One thing that we have learned from the crash is that cash in the house is not the same as cash in the bank… and yes, it should be in the bank before it goes into the house.

  2. No kidding. This is crazy. Even the Extreme Makeovers are bad. Sure they give a really cool house to some needy family but do they wonder how the needy family is going to pay for the increase in taxes or utilities? It’s just encouraging bad money management.

  3. Money Minder says:

    Maybe they’ll do a follow up show on some of these couples and show the resulting foreclosures and short sales.

  4. Brian says:

    The couple in this show, stresses the need for people to educate their children in what is really going on in the world of personal finance.
    The realtor could care less about their future and only hopes that they will come back and list the house for sale when things head south.

    If Mr TML really wants to get upset watch some of the shows that show flipping homes is a easy way to get rich.

  5. Lurker Carl says:

    Either the folks at HGTV are blissfully unaware of the 180 degree turn in the housing and finance markets or they have another full season of these fluff shows to clear out of the pipeline before coming up with new crap like “Short Sell My House” or worse.

    It amazes me that HGTV finds people willing to spend $20K to remodel before moving out. Or buy stainless steel appliances, doesn’t anyone realize SS is the new harvest gold? Or hire a construction crew of Comedy Central wannabes to do the work? Just sell the place for $20K less than the competition. Duh.

    I’d love to see what these cheezy renovations look like 10 years later. Pity the new owner. Powder and paint make them what they ain’t!

  6. PT says:

    TML, you get me more fired up that Drudge. I swear. :)

    I emailed HGTV and expressed my displeasure with this program choice.

  7. Andrea says:

    Wise – even Extreme Makeover is a scam. I personally know of one episode where the poor down and out couple actually purchased a “beater” house on a large lot because although their tribulations were real, their current home was too nice to destroy and their lot wasn’t big enough for the EM team to do something extravagant.

    Anyway – I feel your pain, TML. We don’t have cable so I don’t see those shows anymore, but that episode sounds particular egregious. The network has to keep plying those types of shows, though, because without the hope that things are going to get better, they wouldn’t exist. Not without some substantial changes, anyway. I doubt that too many people will tune in to watch an exciting show on how to put up plastic shrink wrap insulation on windows during the winter.

  8. Lurker Carl says:

    Along a similar note, Money Magazine had an article about one year ago about the only family that won the HGTV Dream House and kept it. In past years, the winners immediately sell the Dream Houses. But one family kept it and is regretting that decision as they slide into bankruptcy, the monthly carrying costs of the property is far greater than their income.

  9. G. Jules says:

    Free Money Finance has been following Extreme Home Makeover winners being forced or sell or being foreclosed on for a while now.

    I think there actually would be a market for a thrifty home tips show now, although it might have to be packaged as an updated homesteading show, with tips on growing food and raising chickens mixed in.

  10. Dorothy says:

    Oh, my word! That show definitely needs hazardous content warning! I work in a mortgage business, and since October 1, our business has gone from mortgages to modifications helping all the people in trouble…

    I think it’s a law of the universe: If you can’t afford to pay principle, you can’t afford the house!

  11. @ junger – I’ve seen that show as well. It is so hokey at the end when there is a dramatic pause before the realtor reveals the big valuation number.

    @ Wise I think they need to be more careful in their screening of makeover candidates, or at least get them to promise not to borrow against their new home right away.

    @ Money Minder I doubt they will but maybe TruTv can do the foreclosure shows.

    @ Brian I’ve watched many of those house flip shows. Most of those flippers have the mindset and maturity of a day trader.

    @ Carl – That’s a good point about the remodeling costs. Most people don’t earn back what they put in.

    @ PT – I am eager to hear how HGTV responds to you!

    @ Andrea There are shows like you describe but I think they all run on Saturday mornings when the DIYers are watching.

    @ Jules – yeah – I’ve seen those posts at FMF and I agree that HGTV should now be producing shows on how to save money at home.

    @ Dorothy I’ve also heard that many realtors are now selling more houses owned by banks than by individuals.

  12. Nelson says:

    Decent post. I linked to it in my weekend link dump (will be posted on Sunday)

    It must have been filmed a while ago for them to be able to get a zero down interest only loan.

  13. Wow…I can’t believe that. Scratch that…Yes, I can believe that! So many people are sucked into the happy boat of debt (whether it is house debt or credit card debt) thinking that they are entitled to be there. Whatever happened to earning a house? Saving up for a down payment and/or starting with a ‘starter’ house as a first home. Just because you are approved for a loan doesn’t mean you can afford it. Yea, that is irritating. Glad to know I am not the only one that yells my “realist” thoughts (my friends will say can be negative thoughts) at the TV.

  14. No Debt Plan says:

    I’m not sure if we were watching the same episodes, but I wrote about this back in April:

    Pretty much the same idea. Stupid people with a stupid realtor pushing them into a bad deal.

    Housing prices always go up, right? …

  15. Lauren says:

    I am just as shocked as most of you, being from Canada you can’t really buy a house without putting some money down, that is why our housing market is doing better then in the US. I am only 24 and years from being able to buy my own house but by saving money that I have invested, I hope that in 10 years time to have 50,000 to put on a home down payment, I am younger then most of the people on this show, how do they not understand how important it is to put atleast some money, any money on the down payment of your house!

  16. Brad says:

    Lauren, first of all, our generation (I’m 27) has an entitlement mentality. Corner office, six figure salary, giant house, country club membership, all before you’re 30…in the U.S. at least. My delusional ex-girlfriend told me she would not stay with me if I couldn’t afford to buy “a new house, not a used one…just to start out and it’s gotta be at least $300,000 because we can always upgrade.” and wants a $32,000 engagement ring, $100,000 wedding band, and $250,000 wedding. That’s the entitlement mentality (I have several other names for her “demands”) Our generation thinks that they deserve everything because they have a degree, or a diploma, or a GED. I’ve watched kids who’ve just graduated from college ask for a salary of $80,000, a month of paid vacation, free banking services, a company car (we don’t have any), use of the corporate jet (doesn’t exist), and about every other perk you could think of. The entitlement attitude extends to real estate, cars, whatever (I deserve this home because I’m alive). I would LOVE to see HGTV start up a new show called “My First Foreclosure.”

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