Home value appreciation could boost holiday spending

For much of the past year, home values have been on the rise, which has led to increasing household wealth. This trend continued in the third quarter, potentially helping boost spending this holiday season.

As a result, more Americans may need to rely on short term lending at the beginning of next year, as consumers are more susceptible to financial struggles following an uptick in expenditures - especially if an unexpected expense arises.

Nationally, home values increased 6.4 percent on a year-over-year basis in the third quarter, and 1.2 percent when compared to the previous three-month period, according to the U.S. Zillow Home Value Index.

"Far from being a negative sign, we're relieved to see more noticeable signs of cooling in the market," said Zillow Chief Economist Dr. Stan Humphries. "If home values continued to rise as they have, relatively unchecked, we would almost certainly be headed into another bubble cycle, and nobody wants that."

Consumer spending picked up in August
It appears as though Americans were able to reap the benefits of home value appreciation in September, as personal expenditures increased 0.3 percent, according to the U.S. Department of Commerce.

Russell Price, senior economist at Ameriprise Financial Inc, told Bloomberg that increases to wages and salaries is encouraging, and may lead to future spending bumps.

Short term lending could prove beneficial to consumers
Americans who do spend more this holiday season may need to take advantage of a short term loan in January. People enjoy buying gifts for their families, and often stretch their budget too far doing so. Therefore, these consumers could be putting themselves at risk in the future.

For example, if the transmission in their car blows following the holidays, they may not have enough money to cover the repair bill and other essentials. Instead of incurring costly late fees and penalties, consumers can turn to short term lending. This type of assistance provides funds quickly so people don't fall behind on their monthly expenses.

In recent months, short term loans have come under fire because opponents say they charge outlandish fees and rates. But, the costs incurred through this type of lending are often less than what would be charged if a credit card or utility payment was missed, so it could be beneficial for many consumers.