LOVELAND - The prevalence of the oil and gas industry in the state will keep the Colorado economy from rebounding more quickly or even in line with the rest of the nation, according to an economist with the Federal Reserve.

Mark Snead, assistant vice president in the Denver branch of the Federal Reserve Bank of Kansas City, addressed the Colorado State University Everitt Real Estate Center's Real Estate Rendezvous Thursday morning.

"Never underestimate the role of oil and gas in this state," he said.

Snead explained that Colorado is a "tier two" energy state, so when energy prices took a nosedive it had a substantial impact on the economy. The issue now is that while oil prices have bounced, natural gas prices continue to plummet. As in past recessions, energy states such as Colorado will lag the overall turnaround.

"The good news is that Colorado has been outperforming the nation," he said.

He pointed out that housing inventory may have already hit a baseline in Colorado and that home prices in the Denver market have hit a clear bottom.

"I view that as the single best sign you can point to," he said. "It's a very good sign."

As part of the event, the Everitt Center released its home price indices for the first half of 2009. The research, conducted by Sriram Villupuram and John Gerhard, showed that Northern Colorado home values continued to decline through June. The house price index uses a baseline of 100 set in 1997.

For the first half of 2009, the home price index in Weld County was 106.1, meaning for every $100 in value in 1997 the value is now $106.10. Weld County's index peaked at 145.2 in 2005. Year-over-year, the index declined 9.8 percent.

The home price index within the municipal boundaries of Greeley and Evans was 95.8, meaning values are lower than they were in 1997. Homes valued below $129,900 in Greeley and Evans had an index value of 83.7. It was the only municipal area studied that dropped below 100.

In Larimer County, the index was at 140.2 through the first half of the year. It peaked at 150.8, also in 2005. Year-over-year, the index for Larimer County declined 4.3 percent.

Gerhard pointed out that the number of residential closings for Larimer, Weld and Boulder counties peaked in 2004. For the first half of 2009, closings are down 20 percent.

"My hope is that we would pick up some steam in the second half of the year," Gerhard said. "I'm not sure that's going to happen."

The data showed Greeley and Evans as the only areas with a stable number of closings from 2008 to 2009, with Fort Collins and Timnath seeing the largest year-over-year decline. Gerhard feels that it is a sign that the Greeley market might be ready to pick back up.

The EREC also presented the results from a survey of commercial real estate professionals in Northern Colorado.

"It's just going to be plain harder in 2010 than in 2009 for us," said Steve Laposa, director of the EREC.

In general, commercial real estate professionals indicated that finding financing and closing deals would be more difficult next year than it was this year. Developers were more pessimistic than brokers on most of the issues.

Overwhelmingly, survey respondents felt that private financing would be on the rise in the coming years, while more traditional sources would continue to decline. Additionally, many said that public-private partnerships would be a more integral element to deals in 2010.

See Friday's issue of the Business Report for a more in-depth discussion of the survey results.