Here’s a thought-provoking assessment of island real estate by my friend Chuck Smith (www.oftwominds.com) after learning of the recent sale of a Manoa house where his family once lived.

There may be a few more spectacular real estate markets than Honolulu, Hawaii, but not many. With a median single-family home price around $615,000 (Honolulu home prices 3rd highest in nation), Honolulu trails only Silicon Valley and San Francisco in nosebleed-valuation territory.

But have Honolulu homeowners really reaped fantastic returns during the 2002-2007 real estate bubble? We have to look beneath the surface statistics to find out. While this exercise is specific to Honolulu, I believe it may be equally valid in many other markets in the U.S.

Here is my conclusion: the real (inflation-adjusted) gains in Honolulu were reaped in the 1970-1981 period; all buyers since 1981 have essentially made nothing. Yes, the nominal value of their house has risen, but when we factor in inflation, we find no real gains from the top of the last real estate bubble in 1980-81.

In an email to me, he added:

“Real estate is your best investment,” etc. –uh, not even close. Yes, if you bought in 1969 and sold in 1979, but virtually all gains since then have been inflation plus very modest annual increases of less than 1%

All this suggests to me that anyone who bought real estate on Oahu in 2004 – 2007 is very likely underwater or poised to slip underwater, and it is increasingly likely that even those who bought in 2002-2003 might well find their property worth considerably less than what they paid for it.

This also suggests the county will be gathering less property tax revenues as homeowners start demanding reductions in their appraisals back down to reality from bubble-era valuations. From $810K to $550K is quite a drop.

Of course you’re not gonna get an analysis like this from the real estate industry. Everyone with a stake in the bubble-era valuations is hoping nobody looks too closely at what property is actually worth today, and what it might be worth next year, or in 2012.

Read the rest of Chuck’s argument in his “Of Two Minds” blog.

Speaking of what you aren’t going to read in the mainstream media, I was struck by how much of yesterfday’s coverage of the Hawaiian Telcom bankruptcy filing read like it came straight from the company press release. Bankruptcy? Just routine.

A notable exception was Nanea Kalani’s story from the Pacific Business News daily update, which added some important perspective.

Hawaiian Telcom is one of only a handful of legacy telephone companies to declare bankruptcy and it may be the only company providing statewide land-line service to do so.

While scores of telecommuncations companies have tumbled into bankruptcy or closed since the dot-com bubble burst in 2000, most were exclusively wireless specialists, long-distance providers or Internet service providers.

Good job.

The Office of Information Practices has only issued two opinions this year on the broad range of issues that fill its plate, from public records to Hawaii’s Sunshine Law. The lowest annual opinion count in OIP’s history was in 2000, when there were only three for the year. OIP will have to double its year-to-date output during the remainder of this month to avoid matching or beating that poor record.

Jeff Mikulina, who stepped down as director of the local Sierra Club chapter in order to take over as executive director of the Blue Planet Foundation, didn’t take long to make a splash on the editorial page of the New York Times.

And a Seattle Times editorial praises that city’s mayor for his $9 million plan to address rising youth violence. We’ve got the same problem here, but public officials here seem content to leave their heads firmly embedded in the sand (or, some would say, in a more anatomically correct place). Honolulu really is long overdue on an action plan to address gang-related and other youth violence with some significant resources.