Strong home price appreciation could boost holiday spending

During November and December, consumers generally increase spending to purchase gifts for friends and family members. Strong home price appreciation in the third quarter could help boost these expenditures further, as homeowners feel as though they are more financially secure.

Nationally, prices jumped 3.2 percent from the previous three-month period and 11.2 percent on a year-over-year basis, according to the Standard & Poor's/Case-Shiller Home Price Indices. The 20-city composite posted its strongest gain since February of 2006.

Prices have been aided by a strong housing market indicators in recent months, especially buyer demand.

"Housing demand has clearly improved this year," Ryan Wang, economist at HSBC Securities USA Inc, told Bloomberg. "The housing market has benefited from fewer foreclosures over the last year, the share of distressed housing transactions is back to pre-crisis levels, and that has helped to boost home prices in many parts of the country."

Las Vegas posted the strongest gains at 29.1 percent year-over-year, followed by San Francisco, Los Angeles and San Diego - all with increases greater than 20 percent.

Short term lending could help holiday spenders
Should price appreciation encourage Americans to spend more money, consumers could find themselves in a difficult situation following the holidays. After spending a lot of money, people may not be prepared for unexpected expenses that could arise at any time.

For example, if someone suffers an injury that requires a trip to the emergency room, out-of-pocket medical expenses could be costly and force them to fall short on other monthly essentials. As a result, expensive late fees and penalties may be incurred. But, that doesn't have the be the case.

Short term lending could prove beneficial in such a situation, as it allows consumers to obtain funds fast to pay all their bills and cover the surprise expense. However, some may avoid this type of lending due to negative press.

In recent months, short term lenders have come under fire from critics claiming outlandish fees and rates are charged for this type of financing. But, the reality is that the cost of late fees and penalties is often more than what is charged to obtain a short term loan. For this reason, consumers should consider the whole picture before deciding whether or not this type of lending could beneficial.