Rising home prices help boost household wealth

Following the financial crisis five years ago, home prices were slashed, which impacted the spending power of millions of Americans. In recent years, prices have experienced strong appreciation, helping boost household wealth.

This trend continued in September, with prices increasing 12 percent on a year-over-year basis - marking the 19th straight month of annual gains, according to the CoreLogic Home Price Index (HPI) report. When compared to August, prices were up 0.2 percent.

"September marked the unofficial five-year anniversary of the start of the housing crisis," said Dr. Mark Fleming, chief economist for CoreLogic. "The five-year home price appreciation for all homes in the nation was 3.4 percent. While there is still room for improvement, the CoreLogic HPI is at the highest level since May 2008."

Some areas of the country posted stronger gains than others, with Nevada leading the way a 25.3 percent appreciation in September. California, Arizona, Georgia and Michigan followed closely with growth rates of 13.9 percent or greater.

Appreciation is expected to continue in October, potentially making homeowners more comfortable spending money this holiday season. The CoreLogic Pending HPI projected a 12.5 percent year-over-year increase in the first month of the fourth quarter and a 0.1 percent monthly bump.

Retail sales increase in September
It appears as though strong price appreciation has enabled Americans to spend more money with retail sales - excluding auto purchases - in September. According to to the U.S. Department of Commerce, expenditures were up 0.4 percent, which was in line with the median estimate of economists surveyed by Bloomberg.

With low borrowing costs and rising household wealth, consumers hit retailers to purchase the newest cellphones and video games in September.

"Consumers continue to hold in despite all the uncertainty going into the shutdown," Millan Mulraine, director of U.S. rates research at TD Securities USA, told Bloomberg. "We ended the quarter on a fairly solid note. Whether this buoyancy can be sustained remains a question after the hit to consumer confidence from the shutdown."

Short term lending demand may rise in near future
With Americans spending more money, the risk of financial troubles may increase, especially if they face an unexpected expense. For example, if their car breaks down after a major purchase, it may be a struggle to afford the repair bill, and stay current on all other essentials.

Fortunately, short term lending is available to provide assistance in these types of situations. Consumers are able to secure funds quickly so they can avoid any costly late fees or penalties on a missed credit card or utility bill.

However, some Americans may avoid these loans due to negative publicity. Critics claims short term lending comes with high fees and rates that take advantage of borrowers, but that isn't the case. Oftentimes, the cost incurred to obtain a short term loan is less than what would have been paid if a payment was missed on another account.