In today's Honolulu Advertiser, Andrew Gomes has summarized what is going on in the Hawaii housing market and what may be coming. The article focuses on Oahu, but still has some thoughtful tidbits:

Some Hawai'i consumers have feared a local housing bubble was dangerously inflating over the past few years, but to date they've been proven wrong by past predictions of local economists who said O'ahu's housing price boom wouldn't result in a bust…   Paul Brewbaker, chief economist at Bank of Hawaii, said many long-time kama'aina naturally expect that the five-year doubling of home prices will be followed by a decade of price stagnation or worse, mirroring the 1991-2001 housing slump that followed the last boom….But the last boom was largely shattered by a recession in California and financial crisis in Japan that hurt Hawai'i tourism and helped shrink the state economy roughly 1.5 percent from 1991 to 1998…Today, speculative investors are largely gone, and home sales have slowed for more than a year. But general economic expectations are for continued job and population growth, rising personal income, flat interest rates, and steady second-home buyer interest — factors that industry observers say should support healthy sales and keep prices from falling significantly…Of 40 U.S. metropolitan markets where home prices doubled from 2001 to 2006, Moody's Economy.com expects six markets, including O'ahu, to fare the best this year with median price changes between a 0.6 percent loss and 2.1 percent gain. Median prices for the six worst markets are forecast to fall between 9 percent and 16 percent…Part of the reason Hawai'i's housing market hasn't suffered like others is that high regulatory controls over new home construction in the state acted as a barrier to overbuilding that occurred in other markets and hurt prices .

The entire article is worth a read. It provides the views of several reputable people in the industry and, as you'd expect, the views diverge..