CHICAGO (WLS) — Inflation, rising interest rates, a possible recession and geopolitical tensions are making this a difficult time for financial markets.
As we end 2022, what are the prospects for 2023?
Chuck Carlson, CEO of Horizon Investment Services at Hammond and editor of The Dow Theory, predicts what many investors have heard.
“If, in fact, we’re going to go into a severe recession, the Dow Jones Transportation Average is the middle index that investors should watch. It’s probably the most economically sensitive index in the world. And so, if you see the Dow Jones Transportation Average, after the rally it’s had for the past two months, is falling back below its September low, so the odds of a recession are pretty high,” Carlson said.
He said right now it’s a bit mixed because of the Dow Transports rally.
WATCH: Our Chicago: A Look at Investing and Real Estate in 2023, Part 1
When it comes to stocks to buy in the New Year, “There are always opportunities in the market, especially if you’re not necessarily concerned about what the market is going to do over the next week or next month or even the next six months. And I think in 2023 there will be pockets of strength. I think some of the areas that held up in 2022 will continue to hold in 2023 and I think those areas include healthcare. I think that you’ll see that insurers will continue to do reasonably well in 2023. Then if investors want to start dipping their toes into some of the areas like technology, which have been really badly exploited in 2022, I think that’s not no big deal but i think they are going to have to be patient with these purchases because again i think you will probably see at least for the first half of 2023 a bit of the same type of volatility that we have seen here in 202 2.”
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For much of the pandemic, home sales have skyrocketed. They sold out quickly and above the asking price. The market is changing now. The National Association of Realtors reported last week that nationwide “pending home sales” fell for a fifth consecutive month.
These are signed contracts for existing homes, condos and co-ops. At the same time, although mortgage rates have fallen in recent weeks, they are still more than double what they were at the start of January.
So what’s the big picture for the Chicago and suburban real estate market looking ahead to 2023?
Diane Glass, CEO and Designated Chief Broker at Berkshire Hathaway Home Services Chicago, joined ABC7 Chicago to talk about it.
WATCH: Our Chicago: A Look at Investing and Real Estate in 2023, Part 2
“I think it’s really important that we keep today’s market in perspective,” Glass said. “We’re coming off of two of the busiest real estate years that most of us can remember. And that sets the bar really high, and it makes the downturn in the second half of this year very dramatic.”
House prices are “holding up,” Glass said. And she said the National Association of Realtors expects them to stay flat next year and rise slightly in 2024.
“So for first time home buyers there are a few things to consider. The first is to remember that the market is less competitive now. of this busy market, now is a great time to take another look. And then remember that interest rates don’t last forever. In fact, buyers might hear the expression you’re marrying house and you date the rate. It’s likely that in the next couple of years we’ll see those rates change,” she said.
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