Condo sales were down 67 percent in January, the most recent month for which figures are available. Yet the median price of $455,000 was up nearly 6 percent. 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 Kaua'i 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.

The most expensive

Peter Guber's Mandalay Properties is selling Tara Plantation, 174 acres on Papa'a Bay. The property has 18 separate lots. And last month, a judge ruled against the county government, which had sued for access across Guber's property to a public beach.

Price: $46.5 million

Bedrooms: 6

Bathrooms: Eight and a half

Size: 16,000 square feet in main residence