by Jacob Espinoza

Salem isn't overbuilt, and it isn't short on housing. It just spent a decade absorbing the biggest apartment-building wave on record. That’s left people wondering why prices haven’t dropped. 

Here’s what I found. The market is tightening, but it’s not collapsing. I heard this from both renters and developers.

According to Conrad Venti, commercial real estate broker with First Commercial Real Estate, the market has quietly split in two. Small units sit unfilled while family-sized units and houses fill almost the day they list. And for people like Kimberly Crofoot, that split is the whole experience of trying to find a home here.

A whole new world at $1,595 a month

Kimberly Crofoot is starting over. Newly single and essentially an empty-nester, she's living in a just-under-900-square-foot two-bedroom apartment in Salem, paying $1,595 a month. The main thing keeping her here is family: her brother and her kids. "If it wasn't for my family, I might consider moving elsewhere," she told me. 

Kimberly and I talked over text message.

Her real goal is a home base she can travel from. While she's here, she wants to get involved, volunteer, find work and help her niece launch a business. "It's truly a whole new world for me," she said. "It would be cool to get to know Salem more with my free time."

As a single person between jobs paying a two-bedroom rate, Kimberly sits right in the squeeze this story is about. She’s bearing a family-sized cost on her own in a market that's gotten expensive across the board.

The data backs up the feeling. 

Apartment vacancy across the Salem-Keizer market sits around 5.5% and is falling. It’s, well below the national rate of about 8.2%. Those figures come from CoStar market analytics, summarized in a mid-July briefing from Venti.

Venti also surveyed three of the region's largest apartment operators: Neighborly, Centurion, and Alex Ferry with RESI Property Management. Collectively they manage more than 4,200 units. Their portfolios are running 94 to 98% occupied. 

All three described the incoming supply the same way: cautious, but manageable. None were alarmed, none bullish.

So the units aren't empty. But "occupied" and "livable at a fair price" aren't the same thing.

The split most headlines miss

Small units are oversaturated and slow to fill on the operator side, especially in the downtown core and South Salem. Family-sized units, anything three bedrooms and up, plus single-family rental houses, fill almost immediately. The problem isn't too much housing overall; it's a mismatch in what got built. 

Salem put up a wave of small units, and the strongest demand is for the larger ones.

You can see it at Gussie Belle Commons, 180 affordable units on the former Salem General Hospital site east of downtown. Phase 1's 120 units opened in March 2026. Sixty more are coming, with a waitlist of more than 300 families behind them. 

Family-sized, affordable, and effectively gone on arrival.

One-bedrooms go quickly too. Lili Corona-Leyva, who helps Salem renters find apartments and walks them through leasing said many of her clients are renting a room in a shared house and are ready for their own space. "They're tired of sharing a home with multiple people and want more privacy." In her experience, it's the two-bedrooms that linger, unless there's a move-in deal attached.

How we got here

Salem just came off a decade of extraordinary growth, near 7,000 new apartment units over 10 years. That wasn't overbuilding. It was the market catching up to demand the city's own long-range planning projected back around 2018. Low interest rates let developers build "market rate" housing, apartments built without government subsidy. Because at that time the numbers worked.

That math has since broken. After the pandemic, construction, labor, and operating costs all climbed and never came back down, while interest rates jumped. 

Today, almost no market-rate project pencils out without help. That help can come in the form of a subsidy from Oregon Housing and Community Services, a property tax break, or free city land. 

State money also dried up fast, which is exactly why "affordable housing" dominates the local conversation.

You can see the pullback in new projects. About 390 apartments are under construction now, with new starts dropping toward 211. This drop in new apartments sets up an even tighter market by 2027. 

Much of what's still moving depends on stacked incentives. 

The zoning change that shaped the skyline

Two changes reshaped what got built. In 2022, the city adopted Our Salem, its long-range plan rewrite, opening more land to housing and denser development. Then in 2023, responding to state climate rules, the city eliminated minimum parking requirements citywide. Developers could still build parking, but were no longer required to. 

That's why so many new five-story downtown buildings are packed with studios and very little parking. On a spreadsheet, two studios at $1,200 each beat one two-bedroom at $1,600. 

Add on the fact that you don't have to build parking for each and the studios look even better. Salem wasn't a car-free city ten years ago, and we still have not shifted to that lifestyle.

What renters are actually doing

The clearest signal isn't vacancy, it's price. Average rent sits around $1,400 and has gone flat. Two of the three operators are seeing outright decreases, and all three are offering concessions, several with two or more weeks of free rent just to sign a tenant. That's a price story, not an occupancy collapse — remember their buildings are still 94 to 98% full.

But the deals a renter actually encounters may be thinner than that suggests. Corona-Leyva says the splashy move-in specials that defined last year have faded. "Last year, there were some really attractive promotions, like a $99 move-in, where that was all you paid upfront," she said. "Those specials were very popular, and the units filled up quickly. I don't see those offers much anymore, and the current specials generally aren't as good." 

In other words, the concessions haven't disappeared, but the eye-catching, fill-a-building-fast versions have softened into something more modest.

That matters because, from the renter's side, those upfront deals do the heavy lifting. "The biggest factor driving interest right now isn't just the monthly rent, it's the upfront costs," Corona-Leyva said.

Free first month's rent, reduced deposits, and other move-in incentives are usually the first thing her clients ask about, and a two-bedroom that sits quietly will lease much faster once a special is attached.

She's also watching where people are coming from. More of her clients are relocating from the Woodburn area, she says, where housing has gotten expensive enough that Salem now looks like the better value. 

A reminder that Salem is still pulling people in from pricier corners of the mid-Valley.

Underneath all of it is the same pressure. Rents climbed for so long that people are being priced into sharing space while wages haven't kept up. So renters take on roommates, move back in with family, or trade a solo studio for a shared two-bedroom because it's cheaper per person. 

Where home ownership fits

The bigger open question is whether Salem can bring back the starter home. 

For example, a modest older house in a neighborhood like Northeast Salem that sold for $130,000 a couple decades ago now lists for around $400,000. This means a lot of people are priced out. 

To understand what replaces it, I sat down with Chris Blackburn, a Salem developer who has spent close to a decade trying to build small, attainable homes. His answer is the cluster cottage: a group of small houses, under 900 square feet each, or a bit larger if they go two stories, built together on a single lot and sharing a common green space. "I think anyone would rather see in their neighborhood a cluster of cottages versus a cluster of apartments," he told me. "It builds community a different way."

His first attempt is a cottage cluster off Schurman Dr in South Salem, and it shows how hard the model still is to pull off. The original plan was simple: rent the units out. Then he looked at turning them into for-sale condos, with a lease-to-own path where a renter could buy within a few months and put some of their rent toward the purchase. The idea proved to be much more difficult to execute. 

The economics are the hard part. At today's loan rates, buying one of these cottages would cost more per month than renting the same unit. That gap between what a place rents for and what it costs to own, is a big reason first-time ownership stays out of reach even when the homes themselves are small.

Blackburn expects to see far more of these communities regardless. He says other builders are already putting up cottage clusters around the mid-Valley, and he's eyeing a former correctional site where micro-lots could fit hundreds of small homes where a conventional subdivision would hold a fraction as many. "Someone's going to really perfect it," he said, "and it's going to be these little micro cottage communities."

The bottom line

The healthy version of Salem's future is one with more choices for renters and buyers alike. A combination of downtown studios, three-bedroom family apartments, and individually owned cottage homes. By that measure, the city is roughly on the path its own long-range plan predicted. Building is slowing as subsidies dry up and rates stay high, but that slowdown lets existing apartments stay full and lets new ones get absorbed without flooding the market.

The people actually building here say the math only truly changes when Salem makes it cheaper and faster to build small, attainable homes. And, in Blackburn's view, when it brings in the jobs that let people afford them. The tools exist: cluster cottages, smarter land deals, fee relief. In his words, whether Salem uses them is the open question.

For Kimberly, that question is personal. She's here for the people she loves, curious about the city, ready to plug in, but weighing a home base against the freedom to travel.

Hers is the story the numbers can't fully tell: Salem is building, Salem is nearly full, and still, for a lot of people, hard to truly settle into.