Salem Real Estate Market: Investment and Affordability

Salem's real estate market is currently experiencing a unique shift, marked by longer home-selling times and a notable increase in price reductions by sellers. Despite these adjustments, many potential buyers still find homes unaffordable. Meanwhile, builders are pivoting towards constructing rental properties rather than homes for sale. The commercial real estate sector is also active, with investors pouring millions into revitalizing older downtown buildings, although several prominent commercial spaces still remain underutilized. This raises questions about whether Salem's economy is faltering or if the dynamics of real estate participation are evolving.

These issues were the focus of the “State of Real Estate: Industry Insights & Outlook” conference organized by AmeriTitle on October 14, where over 200 real estate professionals gathered to discuss the evolving trends in the Mid-Willamette Valley.

Eric Templeton, Senior Vice President at AmeriTitle, noted that while current mortgage rates are relatively normal, housing prices are at historically high levels. His findings indicate a market struggling to regain equilibrium. Sellers are increasingly lowering their asking prices, yet the necessary broader market correction has yet to occur. A significant factor contributing to this situation is that homeowners with low mortgage rates (around 4% or less) lack motivation to sell, which restricts inventory and keeps prices high, despite buyers facing affordability challenges.

This stalemate leaves both sellers and buyers dissatisfied, as each side waits for the other to make a move. However, builders cannot afford to wait indefinitely, creating pressure on them to adapt to market conditions.

Mike Erdmann, the CEO of the Home Builders Association of Marion & Polk Counties, reported that in 2026, over one-third of new homes sold experienced price reductions, the highest percentage observed since 2012. Between January and September of that year, 36.5% of new home sales involved a reduction from the listed price, with 23.4% selling for at least 3% below their original asking price. However, simply lowering prices does not address the core issue of affordability. Erdmann highlighted that monthly mortgage payments on the average newly built home would consume about 45% of the median family's income, approaching levels seen prior to the 2008 housing market crash.

This affordability crisis extends beyond individual buyers, as developers increasingly focus on creating rental housing. While this strategy is essential for meeting Salem's housing demands, it underscores the distinction between increasing housing units and expanding opportunities for homeownership. In the year leading up to September 2026, apartments comprised 60% of newly permitted housing units in Salem, and when factoring in middle housing primarily intended for rent, Erdmann estimates that over 70% of new housing production is rental-focused.

In contrast to the residential market, commercial investment in Salem tells a more optimistic story. Nick Williams, Vice President of Capacity Commercial Group, shared data indicating that Salem ranks ninth among the 50 state capitals in terms of employment growth fueled by local economic investments. These jobs, particularly in sectors such as healthcare, manufacturing, and distribution, create a foundation for housing demand and support local businesses.

Williams reported approximately $368 million in commercial property sales across Marion and Polk counties, with multi-family properties making up the largest segment of these transactions. Salem's ranking as ninth among state capitals for employment growth from 2015 to 2025, while placing 28th for retail job concentration, illustrates how industries that draw external funding bolster local businesses and services.

Despite the challenges in the housing market, investors continue to identify opportunities in the region. However, the real challenge lies in how these investments will be utilized moving forward.

A.J. Nash, Partner and Principal Broker at Tradition Real Estate Partners, highlighted the complexities involved in redeveloping properties, using the transformation of the former Liberty Plaza into The Forge, a $12 million project now boasting 92% occupancy, as an example. This success required more than just securing tenants; navigating outdated permitting requirements added significant costs and complications, necessitating that owners make improvements and adapt spaces to meet the financial capabilities of local businesses.

Conversely, Charles Weathers of ORREO Development showcased a successful redevelopment of the historic Grey Belle building into Fork Forty, a modern food hall that brings together independent restaurants. This project exemplifies how aligning historic preservation tax credits with public incentives can make ambitious redevelopment initiatives financially feasible.

These redevelopment efforts illustrate the potential for revitalizing aging structures while addressing contemporary economic needs, though they also highlight the ongoing challenges faced by the real estate market in Salem.