1. Honolulu
Median home price: $579,300

Home buyers pay a premium to buy a slice of paradise.

During the first three months of 2011 the median price of a home sold in Honolulu was nearly $580,000, according to the latest data from the National Association of Realtors. That gives Honolulu the distinct honor of being the most expensive housing market in the nation.

"Oahu is beautiful and it has the best weather in the world," says Honolulu-based real estate agent Bryan Hino. That has attracted many well-heeled foreign buyers, which has helped keep prices high.

It's not just the lure of balmy weather and palm trees that keeps homes pricey. Hawaii is one of the most remote places on earth and many building materials have to be shipped long distances to get there.

Land is also limited and the terrain difficult to navigate, which helps to inflate property values and construction costs. Honolulu is hemmed between ocean and mountains, leaving little land left that is easy to develop. Much of the land that remains on Honolulu's home island of Oahu has been set aside for preservation, military or agricultural purposes, leaving a small fraction for home building.

Luckily, many Hawaiians are better prepared to afford the sky-high prices: Residents' median household income is $81,000, about 25% higher than the national median, according to Wells Fargo Bank.

Median home price data is for the first three months of 2011 and was compiled by the National Association of Realtors.
Last updated June 15 2011: 9:34 AM ET
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