Money - What Goes Around, Comes Around

Maybe a more correct title is: "Capital Gains - What Comes Around, Goes Around" but that's not so catchy, is it?

It's no secret that Maylia and Jeff had fortunate timing in terms of buying & selling their home when leaving the US. In July 2006, at the height of the property bubble, their home sold after being on the market for just 3 hours. And after 18 months, those gains from the US-side sale became equity in their Prague-side home.

Jeff & Maylia were thinking "Boy, we sure were lucky to escape that property bubble in the US!" What they didn't know was, their first 18 months in Prague were the tail-end of a similar bubble here.

After almost 2 years of hearing how assorted crises are affecting the US, it is finally Europe's turn, particularly the Central/Eastern region (former satellite states to the Soviet Union). It wasn't always bad news. But that optimism faded fast.

Property Values
Take, for example, how volatile the property values are here (too). As recent as last spring, Jeff's real estate broker offered a price 25% more than purchased -less than 3 months after moving in. Since then, the value rose, peaked and fell back down to nearly the same negotiated price from early 2007. In two years, property values, especially downtown, have risen and fell 30-40%. Who knows if or how far it will continue, but we'll be watching.

Employment
A topic near and dear to our hearts: secure employment. For Europe, rising unemployment is confined to Central & Eastern European countries (Jeff) and hardest on foreigners (Jeff). Especially on higher paid, non-EU with annual visa overhead foreigners (Jeff, Jeff, Jeff). So, in all respects, that affects us, the Parkers.

We're planning against the what-ifs and keeping our 40 fingers crossed. If we must go, the govt may even pay our way home.

Currency
In Prague, money is a hot topic because Czech's currency is the crown (though part of the EU, we've not yet adopted the euro). Lately the Czech crown has been plummetting in value, compared to every majorly traded currency (dollar, euro, pound).
For example, if you visited us just last summer, $50 got you 800 Kc (our week's groceries). Over Thanksgiving or Christmas, $50 got you 950 Kc (a restaurant lunch for two, ...twice). And, if you're visiting today, $50 gets you nearly 1,200 Kc (Ella's monthly school tuition). Yes, the crown is hurting.
"Hey, but it's good for exports, right?"

There's a positive side for visitors. An article last week cited Czech Republic as the second cheapest vacation destination in the world (Hungary is 1st), even cheaper than visiting Bulgaria, Turkey or Kenya. Gosh, that's ....great. Of course, it's easy to applaud a cheap dinner while forgetting flights are much, much more.
Hopefully past visitors can find some humor in this.

Our Future
Watching fluctuations coincide between both the $/Kc exchange rate and the local property values, Jeff has seen our Prague flat more than double, then half in $ value. (Our local flat value in terms of dollars matters because that's what we must consider when moving back.)
To be certain, had we decided when we visited last summer to just sell and stay ...it would have been good; it would have been very, very good. Coulda, woulda, shoulda.
Different story less than a year later. Suffice to say, already our gains from the US sale is all but evaporated.
Easy come, easy go.

Still, no worries to the grandparents, family and friends, it will not affect the timing of our Master Plan ™