Home sales in Grand Junction, Colo., have taken a plunge

— -- The housing market in Grand Junction, Colo., is in reverse. Nationwide, the cities that were hit by the housing bubble are seeing home sales climb, while Grand Junction is watching sales tumble.

"The first quarter of this year was the worst quarter that we've ever had," says Sandy Barger, chairman of the Grand Junction Area Realtor Association. In July, its home sales were down 42% from a year ago.

Grand Junction, the state's largest city on the western slope of the Rocky Mountains, has been the victim of its own boom and bust.

Its economy is largely dependent on the gas and oil industry. In recent years, energy firms rapidly expanded and added many jobs, which attracted more people to Grand Junction. Home prices soared.

Then, when the recession hit, the price of natural gas plummeted and a lot of people lost their jobs. About 12 months ago, the housing bubble burst.

"It was a double whammy for Grand Junction," says Martin Shields, regional economist at Colorado State University. "They were struck by the national malaise, and they are dependent on a sector that has been particularly hard hit."

Before, home construction boomed; now, it's halted.

Home foreclosures are starting to increase as people have lost jobs. Many homes were bought when the market was booming and prices were soaring. Now many people are upside down on their mortgages and are starting to just walk away, Barger says.

Grand Junction, in Mesa County, has seen its unemployment rate jump to 9.1% in July. A year ago, it was about 4%, Shields says.

The federal first-time home buyer tax credit has helped some — allowing some people to sell their lower-priced homes to first-time buyers, and the sellers moving up to homes that they couldn't afford at the peak of the market.

"I don't think that we will ever have the boom that we had before, because I don't think we'll have the same number of oil and gas jobs," Barger says. "I think we're now adjusting back to a more normal market."