Salem apartment development is being shaped by a string of policy changes since 2022: the Our Salem plan rezoned major corridors for mixed-use apartments, the city removed minimum parking requirements citywide in 2023, and Oregon’s new housing needs program now assigns Salem a target of about 2,000 new homes a year. For owners of existing buildings, those changes make new construction easier to permit, while the state’s rent stabilization law and its 15-year exemption for new buildings shape how the new supply competes with older apartments.
Salem is Oregon’s capital and the seat of Marion County, and the city also extends across the Willamette River into Polk County, where West Salem sits. The Census Bureau counted 175,535 residents in 2020 and estimates 181,779 as of July 2025, according to the city’s QuickFacts profile. The same source puts the owner-occupancy rate at 55.9% and median gross rent at $1,400 for 2020–2024, with median household income of $75,487. Those numbers describe a mid-sized capital city where roughly 44% of occupied homes are rented, which gives new and existing apartments a large shared pool of tenants.
The land shortage behind Salem’s rezoning
The policy changes of the past four years trace back to a single finding. The city’s Housing Needs Analysis, adopted in 2014, concluded that Salem had a projected 207-acre deficit of land zoned for multifamily housing, enough for 2,897 homes, and that nearly 60,000 more people were expected in Salem’s portion of the urban growth boundary by 2035.
In plain terms, the city had enough land for single-family houses but not enough correctly zoned land for the apartments its population forecast required. The city’s main response was to rezone land inside the boundary. Everything that followed, from mixed-use corridors to middle housing, is a response to that gap.
Our Salem and the mixed-use corridors
City Council adopted the updated comprehensive plan, known as Our Salem, on July 25, 2022, and the zoning changes took effect August 24, 2022. The plan rezoned land along major corridors to mixed-use designations, including Mixed Use-II, so that apartments and commercial space can sit side by side along arterial streets rather than being confined to a few multifamily districts.
The practical shifts for builders and owners are:
- Apartments on commercial corridors. Corridor land rezoned to mixed use can carry residential units alongside ground-floor businesses.
- More sites, more competition for tenants. Corridor rezoning spreads potential new supply across the city rather than concentrating it downtown.
- Redevelopment value for older properties. A small, older apartment building or strip commercial site on a rezoned corridor may now have a higher-density use available, which can change how buyers value the land.
The effect is gradual. Rezoning creates capacity; it does not build anything. But it means that in more parts of Salem, the zoning map is less often the main barrier to a new apartment project. Financing, construction costs and fees are.
Middle housing in residential neighborhoods
Oregon’s House Bill 2001, passed in 2019, required large cities to allow “middle housing” in areas zoned for single-family homes. Salem adopted its code changes in March 2022, applying them in the RA, RS and RM-I zones, according to the city’s middle housing page.
The housing types now allowed include:
- Duplexes, triplexes and fourplexes
- Townhouses
- Cottage clusters of 5 to 12 homes
Most of these are below the five-unit threshold of a typical apartment investment, but they matter for owners of small multifamily buildings. A fourplex or cottage cluster in a residential neighborhood competes for the same renters as an older six- or eight-unit building nearby, often with newer finishes. Over time, middle housing is likely to add the most competition in neighborhoods that previously had almost no new rental construction.
Parking minimums are gone
On April 24, 2023, City Council adopted Ordinance No. 4-23, eliminating minimum off-street parking requirements citywide. The city’s staff report tied the change to Oregon’s Climate-Friendly and Equitable Communities rules, which set a state deadline of June 30, 2023 for cities like Salem to reform parking requirements.
For development, this is one of the most consequential changes on the list. Structured parking is expensive to build, and surface parking consumes land that could otherwise hold units. Without a mandated ratio, a developer can match parking to what the market and lenders require, which can make smaller infill sites feasible.
For owners of existing buildings, the change has two sides. New competitors may offer fewer parking spaces and lower rents, while buildings with ample on-site parking may find it becomes a selling point in neighborhoods where newer projects provide little. Owners with excess surface parking may also find that the land under it has development potential it did not have before.
How much housing Salem is expected to build
Two different targets are in circulation, and it helps to keep them separate.
The city’s own planning number
Salem’s Housing Production Strategy cites the city’s housing needs work: Salem must plan for 23,355 new housing units from 2015 to 2035, with a six-year share of 7,006 units. That figure comes from the city’s older needs analysis and is the basis for much of the local policy discussion.
The state’s new target
Oregon’s Housing Needs Analysis program, created by the Legislature in 2023, now publishes housing needs and annual production targets for each urban area. The 2026 Oregon Housing Needs Analysis results, released in December 2025, put the 20-year need for the Salem urban growth boundary at 31,236 units, with a one-year production target of 2,002 units. The one-year target is broken down by income:
- 650 units for households at 0–30% of area median income
- 415 units at 31–60%
- 205 units at 61–80%
- 280 units at 81–120%
- 453 units above 120%
Statewide, the analysis estimates a 20-year need of 491,347 units.
The state’s figure is materially higher than the city’s. Spread evenly, the city’s 23,355 units over 20 years works out to roughly 1,170 units a year, while the state’s one-year target is 2,002. The difference reflects the state’s methodology, which adds current need, made up of past underproduction and housing for people experiencing homelessness, to future need from population growth, demographic change and homes lost to second and vacation use. Whichever number is used, the direction is the same: Salem is expected to permit considerably more housing each year than the city’s older plan assumed.
The income breakdown is telling. Nearly two-thirds of Salem’s annual target is for households at or below 80% of area median income, where market-rate construction rarely reaches without subsidy. Only the top band, 453 units a year, aligns naturally with new market-rate apartments. That suggests the bulk of future market-rate competition will be aimed at higher-income renters, while lower-income demand continues to fall on older, lower-rent buildings unless subsidized production expands sharply.
Incentives and fees that shape the pipeline
The Multi-Unit Housing Tax Incentive Program
Salem’s Multi-Unit Housing Tax Incentive Program, known as MUHTIP, offers a property tax abatement of up to 10 years for qualifying projects in the designated core area. Key terms listed by the city:
- Projects must have at least two units.
- For projects with more than 50 units, at least 15% must be reserved for residents earning less than 80% of area median income.
- Each project must provide at least one public benefit.
- Projects must begin after January 1, 2022 and be completed by December 31, 2031.
An abatement of up to a decade changes the competitive math downtown. A new building with abated taxes carries a lower operating cost than an existing building of similar size paying full taxes, which can let the new project price rents more aggressively during lease-up.
System development charges
New construction also pays system development charges, one-time fees that fund infrastructure. Under the city’s schedule effective July 1, 2025 (fiscal year 2025–26), the parks charge is $4,406 per dwelling unit, the transportation charge is $528 per new vehicle trip and the stormwater charge is $0.28 per square foot of new impervious area. Water and sewer charges depend on meter size, starting at $6,813 for water and $5,401 for sewer on the smallest meter.
Because transportation, stormwater and utility charges vary by project, there is no single per-unit total, but the parks charge alone adds $440,600 to a 100-unit project before any other fee. Those costs are part of why new apartments need rents well above what many older buildings charge. The schedule is updated each July, so a project’s fee total depends on when its permits are issued.
The 2025 Housing Production Strategy
In May 2025, City Council unanimously approved a six-year Housing Production Strategy with 17 actions, according to the Salem Reporter. The strategy’s examples include expanding tax incentives for developers and making the permit process simpler and faster. The adopted document lists two actions that bear directly on apartments:
- Creating a new MUHTIP area to support housing near frequent transit service outside the downtown core.
- Revising system development charges to promote different housing types.
If both are carried out, tax abatements would reach beyond downtown and fees could be restructured to favor certain housing forms. Owners of existing buildings along frequent-transit corridors should follow both actions, since they would bring abated new supply closer to their properties.
Salem apartment development in the pipeline
The development pipeline is real but measured. A few projects illustrate its scale:
- Rivenwood, 420 Center St. NE. Deacon Development’s downtown project added 157 studio, one- and two-bedroom apartments, with move-ins beginning in summer 2024.
- High Street Apartments, 277 High St. NE. A six-story, 105-unit project whose site plan was approved in 2024, as reported by the Statesman Journal.
- Block 50. About 230 units were planned downtown, with the project still in negotiation as of 2024 reporting.
- Gussie Belle Commons. A new community on NE 23rd Street near the Oregon State Hospital campus, whose first phase built 120 apartments; families moved in during January 2026.
At the citywide level, the Salem Reporter counted 39 multifamily projects with 695 apartments permitted in 2022. That count covers apartments only, while the state’s target of 2,002 a year covers homes of every type, so the two are not directly comparable, but they show the scale of the gap the city is being asked to close. Statewide, Axios reported that Oregon issued only about 4,800 multifamily unit permits in 2024, the fewest in more than a decade. Taken together, those figures suggest the policy changes have opened the door to more apartment construction, but high construction and financing costs have kept the actual flow of new units well below the state’s annual target.
Rent stabilization and the new-construction exemption
Oregon’s statewide rent stabilization law affects how new and existing buildings compete. Under ORS 90.323, a landlord may raise rent no more than once in any 12-month period and, after the first year of a tenancy, must give at least 90 days’ notice. Annual increases are capped at 7% plus the Consumer Price Index, with a hard ceiling of 10% added by Senate Bill 611 in 2023.
The Oregon Office of Economic Analysis publishes the cap each year on its rent stabilization page. The maximum increase was 9.5% for 2026 and is 10% for 2027, and KGW reported that the 2025 cap was also 10%. Three years in a row, then, the formula of 7% plus inflation has landed at or near the 10% ceiling. The constraint bites hardest on owners trying to move a long-term tenant from a far-below-market rent toward current market levels in a single step.
The cap does not apply to a unit whose first certificate of occupancy was issued less than 15 years before the date of the rent increase notice. That exemption rolls forward each year. A building that received its certificate in 2012 becomes subject to the cap in 2027, and every project delivered today will be free of it until about 2041.
For owners, this creates a two-tier market:
- New buildings can reset rents freely for 15 years, which gives them more flexibility to push rents if demand is strong.
- Older buildings are capped, which limits how quickly they can move rents toward market after a period of below-market leasing.
What this means for owners
Salem’s development rules have shifted in favor of new supply, and owners of existing apartments can plan around that in concrete ways:
- Know your corridor. Check whether your property sits on or near a corridor rezoned under Our Salem or a frequent-transit route that could become a new MUHTIP area. That is where abated, parking-light competition is most likely to appear.
- Watch the income bands. State targets emphasize lower-income housing that market-rate projects rarely serve, so older buildings with moderate rents face less direct competition from new market-rate projects than their location alone might suggest.
- Use the cap calendar. With the 2027 cap at 10%, plan renewal notices at least 90 days ahead and space increases at least 12 months apart.
- Value the land, not just the building. Rezoning and the end of parking minimums may give a small older property, or the parking lot beside it, redevelopment potential that buyers will price in.
- Track fee schedules. System development charges reset each July and directly affect what new competitors must charge to cover costs.
Owners comparing Oregon’s rent rules and tax treatment with other states can use our state-by-state guide to rent control and property tax. For more on the region, see our Oregon markets page or our Salem market page.
