A tiny town with a population of just around 500, Hanalei, Hawaii, lies along the northern shores of Kauai, just east of Na Pali Coast State Park. Hanalei is most famously known for being the setting for the 1958 musical, "South Pacific," and scenes from the movie were filmed across many sites in town. Like many communities on the islands, The Hanalei real estate market was hit by the economic meltdown that plagued real estate markets across the U.S. and the greater globe, sending home values down and causing the number of foreclosures in Hanalei to rise. The local market has begun to pick back up recently though and has shown signs of improvement in sales volume, though prices are still struggling.

In September, the most recent month for which statistics are available, there were three residential homes sold, unchanged from the same month a year ago. There were five condo sales in September, up from four in September 2009. So far in 2010, there have been 61 residential homes sold, a healthy 39% increase from sales over the first nine months of the year at the same time last year. Condo sales also saw a 30% increase in sales volume over the first nine months of the year, with 52 condos sold from January to September, versus just 40 condo sales in the first nine months of 2009.

Hanalei homes for sale in September garnered a median price of $610,000, an 11% decline from September a year ago, when the median price for a residential home was $685,000. The median price in September for condos fell even further, by nearly 27%. In September, the price was $385,000, down from $525,000 at the same time a year ago. The median price year to date for residential homes currently stands at $645,000, down about 6% from a year ago, when the price was $610,000. The year to date median for condo sales through September was $448,900, a 25% decline in the median from last year's first nine months, when that figure was $600,000.