Home value appreciation could boost household wealth in 2014

Consumer spending is expected to pick up at the end of this year as people purchase gifts for friends and family members. But, continued home value appreciation could keep spending levels high into 2014.

According to Zillow's housing predictions for next year, U.S. home values are expected to increase by 3 percent - a sustainable level.

"In 2013, home values rose rapidly – about 5 percent nationwide and more than 20 percent in some local markets," said Dr. Stan Humphries, chief economist at Zillow. "These gains, while beneficial in many ways, were also unsustainable and well above historic norms for healthy, balanced markets. This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices and more supply created by fewer underwater homeowners and more new construction."

With increased expenditures, more Americans may find themselves in financial troubles should an unexpected expense arise. As a result, short term lending demand may increase.

For example, if someone's car breaks down after a period of high spending, it may be difficult to cover the repair costs and keep up with essential expenses. To avoid a situation where people are unable to pay their bills, a short term loan could be taken out.

However, this type of lending has come under fire in recent months, with opponents claiming high fees and interest rates are charged. But, it is important to look the big picture, as the cost of obtaining a loan is often less than what a consumer would face in late fees and penalties if a bill payment is missed. So, short term lending could prove beneficial to many people if they just consider all the factors.