According to the National Association of Realtors, vacation home sales in the U.S. hit a record of 1.07 million homes in 2006. What’s a little scary about this number is that “the share of second-home sales was 36% of all existing and new residential real estate transactions in 2006.” More than a few of those were speculators buying investment property to fix up or flip, but still…

There’s been a lot of talk about a housing bubble bursting, which so far hasn’t been too painful in most areas (parts of Florida and California experiencing the worst), but many intrepid investors are finding much better values outside the U.S. Even in parts of Mexico that you could argue are overheated, such as Puerto Vallarta and San Miguel de Allende, prices are still half or less what they would be north of the border. Often the workmanship is far better as well, with things like custom tile work and swimming pools made to order.

If you are more of a pioneer, you can find even better real estate deals abroad and have almost no downside risk. We’ll be covering specific markets here and on the pages of Luxury Latin America later, but there are some enticing value plays in Argentina, Uruguay, Ecuador, Nicaragua, Panama, and others. The median price paid for a vacation home in the U.S. in 2006 was $200,000. Open up your definition of what a second home can be and you might end up buying two or three houses for the price of one in the U.S. or Canadian location you were considering…

If you read the financial news, you know the U.S. dollar is in the toilet. There are plenty of sound reasons for this, plus a few other reasons that have nothing to do with logic or reason. None of that really matters though when you’re planning a trip to Italy or France and you go into cardiac arrest looking at the prices.

Fortunately for U.S. and Canadian travelers, it’s still 2001 in Spanish-speaking Latin America in terms of exchange rates. Overall, things haven’t changed all that much except in Argentina, where it’s a far better deal than it used to be (though not as good as two or three years ago.) Here’s a look at how the U.S. dollar has done so far this year against other currencies.

Argentina +1%

Mexico +1.7%

Ecuador and Panama - unchanged (they use the dollar)

Peru -0.5%

Brazil -5.3% (ouch)

Euro -2.9%

Australia -5.8%

India -5.7%

New Zealand -5.9%

Thailand -8.3% (double ouch)

You better believe these costs will show up in your travel budget, whether it’s taxi rides, hotels, restaurant meals, or museums. Taking a trip to Europe this summer is akin to opening your wallet and letting someone take out 1/3 of your cash. If you go to Latin America, your wallet stays intact.

If you’re looking into retiring overseas or buying real estate as an investment, there’s another reason to pay attention to currency fluctuations. That rural castle in Romania is not looking like such a deal anymore, but beachfront property in Mexico, Roatan, or Panama? That’s a different story.

Maybe those overpaid CEOs everyone is railing against would be better off downsizing. A study profiled in Business Week shows that Chief Executive Officers with huge trophy mansions underperform in the stock market.

Two finance professors studied 432 CEOs of S&P 500 companies and found that 12 percent of them lived in homes of at least 10,000 square feet, or on a minimum of 10 acres. “And their companies’ stocks? In 2005 they lagged behind those of S&P 500 CEOs living in smaller houses by 7 percent, on average,” the article says.

In the hotel world, Paris isn’t the only Hilton who knows how to spend money better than manage it. Hilton Hotels’ Stephen Bollenbach bought a 13,000-sq.-ft. L.A. house after taking the top job in 1997. In the 36 months after the purchase, Hilton trailed the S&P by 74 percent.

Overall, the showy home buyers lagged the S&P by roughly 25 percent in the three years after their CEOs’ purchases, while smaller-home buyers’ companies beat the index by 22 percent.

Perhaps the ones who wanted to prove something should have just bought a nice little vacation home with a view instead.