With only about 60,000 residents on the island of Kauai, the direction of its housing market can seem to change with the tropical winds. Take January, when the sale of just a few high-end homes boosted the median price by 31%. By comparison, the median home price last year was up 5.6% from 2005. And home sales, which fell 8.3% in January, were off 29% last year.
Condo sales were down 67% in January, the most recent month for which figures are available. Yet the median price of $455,000 was up nearly 6%. Condos account for about one-third of the housing market.

“In the middle of last year, there was a very big slowdown,” says Neal Norman, owner of Koa Properties. “Everyone started panicking. But by the end of the year, things started turning around.”

With little land available for new development, real estate in Kauai may well be a good long-term investment. Last year, the housing market near the commercial center of Koloa fared the best, but the Hanalei north coast is the “hip place” to buy if you can afford it, Norman says.

The economy is deeply dependent on the 1 million tourists who visit each year. But the filming of a big-budget movie can also make a difference. This summer, film crews will arrive for the making of Tropic Thunder, a war movie being directed by Ben Stiller and starring Robert Downey Jr. and Jack Black.

Kauai is also popular with movie stars looking for vacation homes. Bette Midler and Pierce Brosnan are among the part-time residents. And veteran Hollywood producer Peter Guber (whose credits include Rain Man and The Color Purple) is selling his estate — currently the most expensive on the market.

read more …

(Source: Noelle Knox, USA Today)