If you are looking for affordable Hawaii real estate, you need to check out Puna on the Big Island. Puna is a beautiful, low-key area of diverse climate zones and environments with a size of the whole island Oahu.
While the prices of real estate have gone through the roof on Oahu, Maui and Kauai, Puna has remained the most affordable Hawaii real estate even for the Big Island. Kona and Kohala prices are definitely competing with the prices of the other "expensive" islands, Puna (even though so close to Hilo, which also has also become quite pricey) has prices that even the man in the middle can afford.
That also means that luxury properties in Puna (and there are some really nice mansions on good size properties) are also way better priced than in other areas of Hawaii.
Median prices for single family houses (SFH) were around $260,000 as of end of 2007, which is actually almost 10% less than the year before. Even in the worst neighborhoods Oahu you would not be able to get anything under $450,000, so you not just getting a good deal, but also large properties, beautiful environment and can enjoy Hawaii at its best.
This is the reason why a lot of Hawaii residents are now also consider Puna as a viable option for them. People in Hawaii are fed up with the crazy real estate prices, that are mainly driven by foreign investors and absentee owners..
The beginning quarter of 2008 the market in Puna has further slowed down, which gives incredible opportunities for buyers (great for anybody in the US - with the decreasing value of the US dollar Puna has become the discount paradise of the Pacific for international buyers).
If you are not well-versed in the area of Puna yourself, make sure that you have a real estate agent that knows the area well. Stay away from crazy discount sales offered on the internet and newspapers – they are usually blown out of proportion – and make sure that you as the buyer as well as the seller make a good deal.
Without a doubt Puna will remain the most affordable Hawaii real estate market for the coming years, but I see great opportunities there in daily sales reports.