Gainesville was recently recognized for having one of the best housing markets in the nation.

According to the Zillow Home Value Index, the median home price grew 4.2 percent over last year’s.

Zillow estimates the median home price for the area to be $139,100, meaning half the homes in the area are more expensive and half cost less.

Norton Agency President Frank Norton Jr. said prices are rebounding in response to demand in some areas.

"We’re starting to see some shortages of some housing in some price points, principally houses under $225,000," Norton said.

Elementary school districts are driving demand in many areas.

"There starts to be shortages of houses in some of the elementary school districts in South Hall and in some lower price points in the North Hall elementary school districts," Norton said.

The local rise in home prices comes in contrast to many other metropolitan areas that had double-digit decreases.

Merced, Calif., topped the list with a 40 percent decrease, dropping its median home value to $106,500.

Fayetteville, N.C., had the biggest value increase, gaining 13 percent in value to an estimated $120,600.

Norton said young couples and those near retirement are the main buyers in the Gainesville area.

"A number of people are taking advantage of the first-time homebuyer credit," Norton said. "The first-time homebuyer is getting a great advantage. We continue to have a great number of retired people moving into this community."

Norton said many of the area’s pricier homes are still sitting vacant.

"There is a substantial supply in the higher price points, say $500,000 and up," Norton said. "But this dwindling supply (of less expensive homes) really does help our overall marketplace."

Bobby Hulsey, chairman of the Hall County Board of Tax Assessors, said it is a good sign that area property values are up.

"I’m real pleased," Hulsey said. "We’re holding the values because we’ve got the sales to show it."

Hulsey said now is a time when many do not want higher property assessments.

"Property values right now are a thorn in everybody’s side because the economy’s slowed down so much," Hulsey said. "But it’s also very important to maintain the value of a home. That’s my lifetime investment, I want that value to stay up as long as it can."

Official property assessments will be stagnant for at least a few years, Hulsey said.

In May, Gov. Sonny Perdue signed a law that bans local tax assessors from increasing a property’s assessed value through 2011.

The legislation was created to help stop tax increases for residents during the economic recession. Temporarily keeping assessments at their current values would prevent residents from paying higher taxes, provided local governments keep their millage rates the same.

Norton said Zillow’s Home Value Index is one of few studies that includes Gainesville as a city separate from Atlanta.

"This is really one of the first times we’ve been ranked," Norton said. "Sometimes our community floats under the radar ... We get sort of thrown in with the Atlanta market and people don’t realize we’re a separate micro-economic climate."

Norton said the Gainesville area is different than the metro Atlanta area because property is more affordable.

"It’s great news for our community," Norton said. "We’ve already known there’s great value here. You can buy a lot more house here than in other areas, parts of Atlanta, Ga."