Honolulu is far from the mainland, and the nation's mortgage crisis hasn't made many waves there.
Honolulu's banks didn't invest in many subprime loans, says Rochelle Gregson, CEO of the Honolulu Board of Realtors. "Our business practices are conservative."
And home foreclosure hasn't been a major problem, either. In the second quarter, Honolulu's foreclosure rate was the lowest of 100 major metro areas, according to RealtyTrac.com.
Although Honolulu's housing market has fared much better than the mainland, its home sales have hit a snag.
"We're seeing that homes have more days on the market and fewer sales," says Margy Grosswendt, a real estate agent. "The prices are definitely not rising unless it's a spectacular product."
In the past, homes were on the market for about five days, Gregson says. Now, they tend to stay on the market 30 days, she says.
Inflation has shaken the confidence of home buyers. "The fuel prices have affected our lives," Gregson says. "It not only affects our driving habits, but it also affects the cost of goods, such as food and produce, because everything is shipped in."
And although Honolulu is known for a strong local economy with good job growth, this year it was hit by the shutdown of Aloha Airlines. That affected nearly 2,000 employees.
At least Honolulu's high-end market, which they consider prices of $4 million or more, hasn't slowed.
"High-net-worth individuals want to diversify out of the stock market and into trophy real estate," says Grosswendt, who specializes in the high-end market. "It's like a very fine piece of art, and jewelry." High-end homes have been attracting investors from Australia and Japan, as well as the mainland, she says.
The area remains popular due to a mild climate, beautiful beaches and big-wave surfing. And the city of Honolulu is cosmopolitan, with museums, restaurants and an opera theater. It has several highly regarded private schools. Democratic presidential candidate Barack Obama, who was born in Honolulu, attended Punahou school.
"We're very vibrant, we have clean air and water, and we have a friendly aloha spirit," Grosswendt says. "Even when the market slows, we know that it will come back."