A reader sent in this article on Hawaii. "The Big Island's real market is cooling down after experiencing some of its highest peaks in history. Between January and April, median home sales prices in West Hawaii have leveled off or declined up to $200,000, according to the Hawaii Information Service."

"'We're looking at a recession,' said Dave Lucas, a real estate agent since 1985. 'We follow the mainland and we're about six months to a year behind. The decline starts on the East Coast and moves west.'"

"Lucas said states that experienced 'horrendous bubbles,' such as Arizona, Florida and California, are now seeing a dramatic rise in for-sale inventories. He said the real estate market is influenced by radical emotional changes, primarily fear, greed and denial. Any of these unpredictable factors have the potential to shift the market in any direction, he said."

"'People (on the East Coast) get the first inkling of what policies are going to be,' Lucas said. 'Monetary policy is controlled in Washington and on Wall Street so they tend to see which way the wind is blowing first. Their markets have slowed significantly already. In the bubble areas the frenzy just tends to feed on itself until it shuts off.'"

"Richard Bell, a 25-year Kona resident, said history has taught him that West Hawaii real estate is on the decline, and price tags for homes on the market typically decrease 25 to 30 percent during these down cycles."

"'We've pretty much hit the peak,' he said. 'It was insane. I had my cracker-box home appraised for estate purposes and the appraiser set it at $420,000, as is.' Bell's home in Hillcrest has been on the market since Monday for $430,000. His wife bought the home in 1985 for $70,000."

"'What always happens is developers see the market jump and they overbuild,' said Bell."

"Unlike Lucas, 16-year Big Island Realtor Denise Nakanishi does not foresee any huge changes for the real estate market. 'I hear people say it's a buyers market but it's more even for both sides,' she said. 'Nothing has happened to change anything except perception. Prices have receded, but they were too expensive anyway."

"On the bright side, Lucas said West Hawaii's growing economic base and strong construction industry supported by high-end real estate may help stabilize the real estate market. Nakanishi agrees with Lucas that a healthy construction industry will prevent any rapid declines."

"Without these mitigating factors, West Hawaii could face a 'hard fall,' Lucas suggested."

"Lucas recommends that prospective sellers should polish up their property and list the property at five percent lower than the lowest similar property on the market. 'The bottom line is, you cannot have a vibrant, stable real estate market without jobs that pay well enough for people to purchase real estate,' said Lucas. 'When prices exceed the buyers' ability to pay the mortgage then prices must come down.'"