Iowa City Real Estate Blog

North Liberty Real Estate: Knowing the absorption rate helps us figure out trends in the market based on supply and demand.

After posting my quarterly report at the beginning of the month I decided more information is better... My two previous posts covered the absorption rate for homes sold in Iowa City and Coralville. Today North Liberty is under scrutiny. If you've never heard the term absorption rate, let me just clarify that it is a mathematical calculation to help project how long it is likely to take for a home to sell in any given area.

Why should you care about the absorption rate? It will probably help you when it comes to making a buying or selling decision down the road. The absorption rate will give you clues on whether North Liberty is currently a buyers market, a sellers market or a balanced/transitional market. As an example to where it's useful, together with other data this is a valuable tool for Sellers when it comes to figuring out how to price a home before putting it on the market.


I'll start with a calculation of the absorption rate for single family homes / Zero Lots in North Liberty in the price range $100,000 - $300,000:

The first step is to determine the number of homes sold in the past 12 months and how many are currently on the market.

There were 324 homes sold in the last year and there are currently 141 showing as active listings.

324/141 = 2.3 - That means the inventory of homes turned 2.3 times in the last 12 months.

Now we take the 12 months and divide it by 2.3 to come up with the absorption rate.

12/2.3 = 5.2 months = 158 days

The absorption rate of the Coralville market for a home in this price range is 5.2 months or 158 days.

So what kind of market do we have? 6 months is considered a balanced or transitional market. When the average time on market is less than 6 months it would be considered a sellers market and when homes are on the market for more than 6 months, then it's a buyers market.

An absorption rate of 5.2 months is certainly trending towards a sellers market in North Liberty. Obviously encouraging if you're thinking of selling your home in North Liberty anytime soon. Buyers sitting on the fence on the other hand may want to consider making a move. Looks like we're trending away from the buyers market.


That was data for single family homes. Moving onto condos... I looked at condos in North Liberty priced from $80,000 - $200,000.

New construction townhouse style condos are really popular in North Liberty, especially with folks relocating to the area for a few years - like Residents or Fellows with the UI Hospitals. Considering the popularity of North Liberty as an "insider tip" for price and value it's no surprise to see that even with condos, unlike Iowa City or Coralville, North Liberty is trending to a sellers market.

There were 230 condos sold in this price range in the last year and 93 are showing as active.

230/93 = 2.5 - Inventory for condos in this price range turned 2.5 times in the last year.

12/2.5 = 4.8 months = 144 days.

The absorption rate of a condo in this price range in North Liberty is 4.8 months or 144 days.

Now for a quick disclaimer: If you're thinking of selling your home in North Liberty, this data is time sensitive and needs to be looked at again whenever you decide to list your home. Also, I picked homes in popular price ranges to give you a general idea of trends. Especially when you're selling your home it makes more sense to do a targeted absorption rate analysis and that's something I do at the same time I prepare a comparative market analysis.

Iowa City Real Estate Market Update 3rd Quarter September 2009

Coralville Real Estate Market Update 3rd Quarter September2009

North Liberty Real Estate Market Update 3rd Quarter September 2009