Our Chicago: Taking a look at investing, real estate in 2023

CHICAGO (WLS) -- Inflation, rising interest rates, a possible recession and geo-political tensions are all making this an uneasy time for the financial markets.

As we wrap up 2022, what is the outlook for 2023?

Chuck Carlson, the CEO of Horizon Investment Services in Hammond and a contributing editor of the Dow Theory, forecasts what a lot of investors have heard about.

"If, in fact, we're going to go into a severe recession, the Dow Jones Transportation Average is the average investors should be watching. It is probably the most economically sensitive index there is in the world. And so, if you see the Dow Jones Transportation Average, after the rally it's had over the last couple of months, fall and go back below its September low point, then the odds of a recession are pretty high," said Carlson.

He said right now it's a "bit mixed" because of the rally in the Dow Transports.

WATCH: Our Chicago: Taking a look at investing, real estate in 2023 Part 1

As we wrap up 2022, what is the outlook for 2023?

As for 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's going to do over the next week or 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 have held up in 2022 will continue to hold up in 2023 and I think those areas include healthcare. I think you'll see insurers continue to do reasonably well in 2023. Then if investors want to start to dip their toes into some of the areas such as technology, that have really gotten worked over pretty badly in 2022, I think that's OK, but I think they're going to have to show some patience with those buys because again, I think you'll probably see at least for the first half of 2023 some of the same type of volatility that we've seen here in 2022."

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During much of the pandemic, home sales were on fire. They sold quickly and above asking price. The market is shifting now. The National Association of Realtors reported this past week that "pending home sales" nationwide dropped for a fifth straight month.

Those are signed contracts for existing homes, condos and co-ops. At the same time, while mortgage rates have fallen in recent weeks, they're still more than double what they were in early January.

So what is the big picture of the real estate market in Chicago and the suburbs going into 2023?

Diane Glass, CEO and designated managing broker at Berkshire Hathaway Home Services Chicago, joined ABC7 Chicago to talk about it.

WATCH: Our Chicago: Taking a look at investing, real estate in 2023 Part 2

As we wrap up 2022, what is the outlook for 2023?

"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, really high, and it makes the slowdown in the second half of this year feel very dramatic."

Home prices "are holding steady," Glass said. And she said the National Association of Realtors is expecting them to stay steady next year and to rise slightly in 2024.

"So for first-time home buyers, there are a few things to consider. The first is to remember the market is less competitive now. So if you sidelined yourself for the last few years because of that busy market, now is a great time to take another look. And then remember that interest rates are not forever. In fact, buyers might hear the phrase that you marry the house and you date the rate. It's likely that in the next couple years we're going to see those rates change," she said.