USA real estate - note from a reader

This is a note that I received from a regular reader of this blog:

I’m currently visiting USA again for another 3 months.  (You’ll recall my visit to USA and subsequent visit to China last year). I like to try and get a feel of the real estate market and the economy in the U.S. since Australia appears (at least to me) to follow the U.S by about 18-24 months. Things are considerably worse here on the ground, than last year, in my opinion.  Looking at housing and units, empty units are everywhere in every town city, state, just everywhere. I researched this and read here that according to the U.S. Goverment, there are now 18.7 million units vacant in the U.S. Ref: http://www.thefiscaltimes.com/Articles/2011/08/04/9-Worst-Recession-Ghost-Towns-in-America.aspx#page1

Talking with estate agents (if they’ll engage in a conversation - most are in denial) affordability seem to be the lead problem; people cannot afford or will not commit to buy, and people cannot afford to rent at any price. Mortgage rates here are 3.25-3.75% for a 30 year fixed mortgage!. Their parents are telling them not to commit to a mortgage since they themselves now owe more than they paid for their own property and have subsequently become the “near-retirement working poor”.  Some apartment managers (if that’s what they are) are advertsing $500 in cash to sign-up to a lease. Last time I mentioned large numbers of shopping centres and motels were empty and closed up. This time round it’s more motels, an abundance of empty apartments and, restaurants. Restaurants is new for this visit, they have been hit badly, every town/ city along the way has scores of empty closed down restaurants. These were the mid-range market restaurants that offered good meals in the $15-$30 range. They’re closed. For example, where I stayed a few minutes from the Old Downtown Scaramento area, five in the street were shut along with 3 motels. I got talking with the manager of the Motel6 I stayed at which had 7 cars in the carpark on a Saturday night for a complex of 56 rooms.  On asking him the question about the restaurants, he simply stated “No one will spend any money now, even if they’ve got it. They’re all spooked and shell-shocked by the GFC. I don’t know when this will end, if it does.” he said.

I wonder if what’s occurred here will find it’s way to Australia.