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Home prices are up 21% year over year: How the headlines could affect your money

Plus: How to handle a bidding war if you're buying a home.

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Markets are mixed as cryptocurrency prices recover, initial jobless claims mark another pandemic low, and home prices are up 21% year over year. Here's how the news could affect your money.

Stocks mixed as crypto prices recover

Markets were mixed Wednesday as cryptocurrency prices recovered. The Dow dropped 0.5%, and the S&P 500 slid by 0.3% as 9 of its 11 sectors clocked losses. The Nasdaq rebounded from a 1.7% loss, closing the session flat. Thursday morning, the market resumed its climb.

Jobless claim numbers keep getting better

The number of Americans who filed first-time unemployment claims dropped again this week, marking a fresh pandemic low. Initial jobless claims totaled 444,000 for the week ending May 15. That's better than the previous week's 478,000 claims (and far better than the 2.3 million claims in the same week in 2020). It's also better than economists had predicted, suggesting the labor market is improving as more people get vaccinated.

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How to handle a bidding war

The housing market is wildly competitive right now. Based on the four-week period ending May 2, home prices are up 21% year over year, and a record 48% of homes sold for more than their list price, says Redfin. The average home sold for 1.4% over asking, and the typical homebuyer had less than two weeks to make a final decision. 

If you're bidding for a home, decide how much over the asking price you can afford to go, and stick to your guns. Shopping around for the best mortgage rate and getting preapproved for a loan can help you better understand how much house you can afford. 

Even if you love the house, try not to get overzealous in the bidding process, CNBC real estate correspondent Diana Olick said during a recent Grow Twitter chat. "DON'T GET EMOTIONAL (am I shouting??). Give yourself an absolute limit when you start and don't go above it. There is nothing worse than being house poor."

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Words you've heard: inspection contingency

An inspection contingency gives a homebuyer the right to have a property professionally assessed for issues like physical damage and other structural flaws. If expensive repairs are needed, buyers can renegotiate or walk away. Given the hot housing market, more buyers have been waiving these contingencies to win their bid, but experts don't recommend that. 

"You never want to forgo an inspection," Sue Riley, a real estate agent in New Jersey, told Grow. "There's a lot of hidden things that can come up, and you don't want to be on the losing end of that.

Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.

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