Buy Buy, Baby: Your Own Fantasy Island

"Before the financial crisis hit, prices were through the roof," Pappas said. "This is almost a corrective."

There are now bargains to be had all over the globe - with several private islands in the Philippines, South America and Canada listed for $250,000 to $500,000. Technological advances like laptop wind turbines, solar farms and modular housing can help you get that island home for less than $1 million.

The price of Nafsika Island, owned by the Onassis family, in Greece's Ionian Sea has been cut in half.

If you're looking to take advantage of the correction, look for islands with amenities such as power sources, docks, airstrips or helipads, and water desalinators. These features will save you 30% to 50% in renovation costs.

Also, consider your location. If you're looking for more than a vacation home, proximity to a Target(TGT Quote) or Wal-Mart(symbol Quote) might not be a high priority. However, if you're looking for a home to grow old in, you may want to consider an island that's close to a hospital with a helicopter.

Remember: You may own the island, but it's not really yours. Ask embattled financier and alleged Ponzi schemer Allen Stanford, who recently had 250 acres of his 1,500-acre Guiana Island seized by the governments of Antigua and Barbuda, who intend to take the rest eventually.

Monarch Cay was originally listed at $5 million and sold for just over $1 million.

Island ownership isn't without its problems. Campbell Island in New Zealand and the appropriately named Rat Island in Alaska were once teeming with Norway rats, but even the wrong insect can scuttle a private island project.

"There could be sand flies or tarantulas that will require you to fumigate the whole island, which is difficult and costly," Pappas says. "One of the things you want to ask yourself during the island inspection is 'am I getting bitten?'"