Do Zillow’s Prime 10 Housing Markets Work For Airbnbs?

Yearly, Zillow releases its listing of the prime U.S. housing markets for 2025 primarily based on projected dwelling worth progress, job traits, and purchaser competitors. For conventional actual property buyers, these cities would possibly seem to be gold mines. However for short-term rental (STR) buyers, the questions are completely totally different:

• Are STRs authorized and sustainable in these cities?
• Will demand maintain sturdy regardless of regulation dangers?
• Are you able to truly generate constructive money stream, or will dwelling costs eat your earnings?

Lots of Zillow’s picks aren’t trip rental sizzling spots—they’re rising, high-demand residential markets the place laws, taxes, and competitors can complicate STR investing. So, do any of them work for STRs?

How Zillow Selected These Markets

Zillow’s 2025 hottest markets have been ranked primarily based on:

• Residence worth progress: Projected appreciation for 2025
• Proprietor-occupied family progress: Extra everlasting residents transferring in
• Job progress vs. new development: Demand for housing outpacing new builds
• Velocity of dwelling gross sales: Markets the place houses promote the quickest

These components sign sturdy dwelling appreciation and purchaser demand, which is great for home flippers or long-term landlords. 

Nonetheless, STRs’ success depends on completely various factors: occupancy charges, seasonality, authorized restrictions, and affordability. We use information from AirDNA and Zillow (information from March 13, 2025)  to develop our rating system and examine it to different markets.

I discuss with a “regulation overview,” which hyperlinks to every respective metropolis’s on-line regulation data and offers my overview of how strict its laws could also be in contrast to these of different markets.

• Gentle = STR-friendly: A easy allow is the very best regulation.
• Average = Proceed with warning: You are able to do STRs, but it surely turns into tougher with cap limits, permits, and restrictions, and it might change at any second.
• Heavy = Sturdy opposition to STRs: Greater charges and extra necessities to be allowed to function.

With out any additional ado, right here’s a breakdown of Zillow’s prime 10 markets and their viability as STRs.

Buffalo, NY

Market efficiency metrics:

• AirDNA rating: 41/100 (Low)
• Annual income (AR): $29,500 (+11% YOY)
• Common day by day price (ADR): $186.5
• Occupancy price: 51%
• RevPAR: $99 (+10% YOY)
• Lively listings: 1,273 (+5% YOY)
• Zillow median dwelling worth: $224,133 (+5.5% YOY)
• Yield: 14.3%

Regulation overview: Average

Execs:

• Potential fallback plan: May work as a long-term rental if STR fails.
• Vacationer demand: Proximity to Niagara Falls offers some demand.
• Affordability: Residence costs are cheap, with a strong yield of 14.3%.

Cons:

• Seasonality: Probably impacted by colder months, decreasing occupancy.
• Regulatory hurdles: Allow necessities and registration add friction for buyers.
• Booming market: As one in every of Zillow’s prime markets, competitors is rising.

Last verdict: C+

Buffalo presents average STR potential as a consequence of its cheap dwelling costs and yield, however regulatory constraints and seasonality dangers maintain it again. It could work higher as a hybrid STR plus mid-term rental (MTR) technique catering to touring professionals, nurses, or school renters.

Indianapolis, IN

Market efficiency metrics:

• AirDNA market rating: 83/100 (Good)
• Annual income (AR): $28.7K (+12% YOY)
• Occupancy price: 48% (+1% YOY)
• Common day by day price (ADR): $200.57 (+11% YOY)
• RevPAR: $98.58 (+13% YOY)
• Lively listings: 4,026 (+22% YOY)
• Zillow median dwelling worth: $222,887 (+3.6% YOY)

Regulation overview: Excessive

Execs:

• Excessive investability AirDNA rating (77): Sturdy market fundamentals for actual property funding. This metric compares the price of houses utilizing Zillow dwelling worth information to the typical revenue of full-time short-term leases on Airbnb and Vrbo.
• Income progress (92): One of many highest-growing income markets. We calculate this by trying on the change in year-over-year RevPAR for properties that obtained bookings in each intervals.
• ADR enhance (+11% YOY): Day by day charges are rising, suggesting extra substantial host pricing energy.

Cons:

• Oversaturation threat: Listings grew 22% YOY, that means competitors might outpace demand.
• Tourism drawbacks: No standout vacationer points of interest that drive year-round demand until you’re a race automotive fanatic.

Last verdict: C-

Indianapolis has sturdy funding fundamentals and income progress, however sturdy itemizing progress and weak tourism enchantment make STRs a high-risk play. The market might turn into oversaturated, making occupancy and pricing unstable. This market is finest fitted to mid-term leases (MTRs) concentrating on touring professionals, sports activities occasions, and conventions.

Windfall, RI 

Market efficiency metrics:

• AirDNA market rating: 21/100 (Weak)
• Annual income (AR): $47.4K (+5% YOY)
• Occupancy price: 59%
• Common day by day price (ADR): $314.50 (-1% YOY)
• RevPAR: $189.69 (+3% YOY)
• Lively listings: 2,016 (+4% YOY)
• Zillow median dwelling worth: $403,947 (+6.3% YOY)
• Regulation overview: Excessive restrictions and zoning limitations

Regulation overview: Average to excessive

Execs:

• Excessive income potential: One of many highest ADRs on this rating ($314.50) and strong annual income ($47.4K).
• Rising rental demand: Occupancy charges are greater than many different cities on this listing.

Cons:

• Excessive dwelling costs: The median dwelling worth of $403K makes producing sturdy STR money stream tough.
• Regulatory limitations: Strict owner-occupancy guidelines and zoning limits on multifamily STRs.
• Seasonality and competitors: Demand fluctuates exterior of summer time and educational seasons, making year-round bookings inconsistent.

Last verdict: D+

Windfall provides sturdy income potential for the correct property kind, however the excessive price of entry, regulatory complexity, and seasonal fluctuations make it a dangerous STR funding. Traders would wish a waterfront or luxurious itemizing in a first-rate location to make STRs viable right here. For many, the limitations to entry and inconsistent demand make this a weak STR market. Mid-term leases (MTRs) concentrating on school college students, professors, or company vacationers could also be a greater choice on this space.

Hartford, CT

Market efficiency metrics:

• AirDNA market rating: 90/100 (Sturdy)
• Annual income (AR): $26.5K (+10% YOY)
• Occupancy price: 55% (+6% YOY)
• Common day by day price (ADR): $166.64 (+3% YOY)
• RevPAR: $93.76 (+9% YOY)
• Lively listings: 939 (+17% YOY)
• Zillow median dwelling worth: $179,170 (+8.2% YOY)
• Yield: 14.7% (Good)

Regulation overview: Excessive

Execs:

• Excessive AirDNA market rating (90): Signifies sturdy demand, income progress, and funding potential.
• Low dwelling costs: In comparison with different STR markets, resulting in strong money stream potential.
• Annual income: For a low-cost market, it checks out, and the 14.7% yield is a powerful return on funding.

Cons:

• Listings enhance: At 17% 12 months over 12 months, this might sign oversaturation within the close to future.
• Regulatory tightening: STRs will turn into costlier, particularly with licensing charges, zoning permits, and insurance coverage necessities.

Last Verdict: C+

Hartford provides first rate STR money stream, sturdy appreciation potential, and a rising rental market, however incoming laws might make it extra expensive and difficult to function legally. Traders have to be diligent about zoning, permits, and compliance to keep away from fines or operational shutdowns. 

Given the rising competitors and the potential for extra restrictions, buyers ought to fastidiously weigh long-term STR viability earlier than coming into the market. Mid-term leases (MTRs) catering to professionals, touring nurses, and college students could also be a safer, extra steady choice on this market.

Philadelphia, PA 

Market efficiency metrics:

• AirDNA market rating: 70/100 (Average)
• Annual income (AR): $28.6K (+15% YOY)
• Occupancy price: 54% (+6% YOY)
• Common day by day price (ADR): $172.70 (+9% YOY)
• RevPAR: $95.29 (+16% YOY)
• Lively listings: 6,747 (+3% YOY)
• Zillow median dwelling worth: $218,590 (+3.9% YOY)
• Yield: 13.2% (Respectable)

Regulation overview: Average to excessive

Execs:

• Above-average tourism demand: Constant year-round bookings pushed by historical past, sports activities, enterprise journey, and important occasions.
• Sturdy income progress: Annual income is up 15% yearly, and RevPAR is rising by 16%.

Cons:

• 6,747 energetic listings: Up 3% YOY, making it more durable for brand spanking new hosts to face out.
• Sophisticated allow course of: A number of licenses and zoning approvals.

Last Verdict: C+

Philadelphia’s short-term rental market provides sturdy income potential however comes with heavy competitors, strict laws, and tax burdens. Distinctive, high-end, and experience-driven properties have one of the best probability of success, whereas common listings battle to face out.

Traders taking a look at Philadelphia should be ready to navigate zoning, permits, and compliance hurdles. The lodge tax and metropolis enforcement of laws add prices and dangers, making this a greater marketplace for premium STRs or mid-term leases (MTRs) catering to enterprise vacationers, medical professionals, and long-term vacationers.

St. Louis, MO

Market efficiency metrics:

• AirDNA market rating: 71/100 (Average)
• Annual income (AR): $29K (+7% YOY)
• Occupancy price: 54% (+5% YOY)
• Common day by day price (ADR): $176.81 (+2% YOY)
• RevPAR: $98.10 (+7% YOY)
• Lively listings: 3,325 (-9% YOY)
• Zillow median dwelling worth: $173,661 (+2.4% YOY)
• Yield: 16.8% (Top-of-the-line)

Regulation overview: Average

Execs:

• Excessive STR yields: These are at 16.8%, due to inexpensive dwelling costs and substantial rental revenue.
• Listings decline: This quantity went down 9% YoY, indicating a possible discount in competitors as new laws take impact.

Cons:

• New laws: May sluggish STR funding, notably for non-owner-occupied properties.
• Two-night minimal keep requirement: This might restrict flexibility and scale back bookings from one-night enterprise vacationers in some areas.

Last Verdict: B-

St. Louis has been a top-tier money stream marketplace for STR buyers, with low dwelling costs, excessive rental yields, and regular demand. Nonetheless, new laws might make it more durable for buyers to enter and function profitably in the long term.

St. Louis stays probably the greatest markets for STR money stream. Nonetheless, buyers ought to intently watch regulatory developments and guarantee their STRs adjust to new allowing and enforcement measures. Those that navigate the brand new guidelines might nonetheless see sturdy returns, however non-owner-occupied STRs will face rising restrictions.

Charlotte, NC

Market efficiency metrics:

• AirDNA market rating: 92/100 (Sturdy)
• Annual income (AR): $32.1K (+14% YOY)
• Occupancy price: 55% (+10% YOY)
• Common day by day price (ADR): $195.07 (+5% YOY)
• RevPAR: $109.82 (+15% YOY)
• Lively listings: 4,625 (+2% YOY)
• Zillow median dwelling worth: $393,531 (+0.9% YOY)
• Yield: 8% (Low)

Regulation overview: Average to excessive

Execs:

• Excessive income progress: Annual income is up 14% YoY, and RevPAR is rising by 15%.
• Occupancy price: Growing, suggesting sturdy demand.
• Rising tourism and enterprise journey: Pushed by Charlotte’s monetary sector, sports activities groups, and occasions.

Cons:

• Residence costs: Producing sturdy STR money stream is difficult.
• Low yield (8%): Traders might battle to interrupt even, particularly with mortgage prices.

Last Verdict: B-

Charlotte provides rising STR income progress and powerful demand, however excessive dwelling costs and low yield make it tough for many buyers to attain sturdy money stream. The market favors luxurious, high-end STRs with distinctive facilities, whereas commonplace listings might battle with profitability.

For buyers contemplating Charlotte, remember to think about taxes, zoning restrictions, and residential costs earlier than coming into the market. Mid-term leases (MTRs) concentrating on enterprise professionals, medical vacationers, and company relocations might present a extra steady various on this rising metropolis.

Kansas Metropolis, MO 

Market efficiency metrics:

• AirDNA market rating: 98/100 (Wonderful)
• Annual income (AR): $35.9K (+20% YOY)
• Occupancy price: 57% (+9% YOY)
• Common day by day price (ADR): $206.41 (+11% YOY)
• RevPAR: $120.25 (+20% YOY)
• Lively listings: 2,668 (-5% YOY)
• Zillow median dwelling worth: $236,159 (+3.1% YOY)
• Yield: 15.3% (Sturdy)

Regulation overview: Average

Execs:

• Excessive income potential: Annual income is up 20% 12 months over 12 months, and RevPAR can also be rising 20%—one of many strongest progress charges on this listing.
• Demand rising: Occupancy is up 9% YOY, suggesting a wholesome short-term rental market.
• Constant tourism: Sturdy native sports activities, music, and meals scene.

Cons:

• Kansas Metropolis is rising STR oversight, and laws might tighten additional.
• Zoning legal guidelines: Notably in residential areas with STR limitations.

Last Verdict: B

Kansas Metropolis stays one of many strongest STR markets on this listing. It’s inexpensive, has excessive income potential, and has a powerful yield. The mixture of rising occupancy, sturdy income progress, and declining energetic listings makes it a beautiful funding alternative.

Nonetheless, potential regulatory shifts and rising metropolis oversight imply buyers should keep knowledgeable and guarantee compliance to keep away from expensive fines or shutdowns. Those that safe the correct property in a positive zoning space might see substantial long-term success, however new buyers ought to fastidiously consider neighborhood laws earlier than shopping for.

Richmond, VA 

Market efficiency metrics:

• AirDNA market rating: 89/100 (Sturdy)
• Annual income (AR): $29.3K (+9% YOY)
• Occupancy price: 57% (+5% YOY)
• Common day by day price (ADR): $173.70 (+3% YOY)
• RevPAR: $100.32 (+8% YOY)
• Lively listings: 1,579 (+7% YOY)
• Zillow median dwelling worth: $355,189 (+3.8% YOY)
• Yield: 8% (Low)

Regulation overview: Average

Execs:

• Sturdy STR demand: Excessive occupancy (57%) and rising income (+9% YOY).
• Excessive tourism and rental demand: A rising arts, meals, and historical past scene brings guests year-round.

Cons

• Residence costs: Limiting money stream potential and making it tough to attain sturdy ROI.
• Low yield (8%): Most buyers will battle to attain sturdy short-term returns.
• Strict owner-occupied guidelines: In residential zones, it’s robust for full-time buyers to function STRs.

Last Verdict: C+

Richmond provides sturdy rental demand, steady occupancy, and rising income, however low money stream, strict zoning legal guidelines, and excessive allow prices make STR investing tough.

STRs solely make sense for owner-occupied hosts or buyers concentrating on nonresidential zones, the place there’s extra flexibility. As a consequence of zoning restrictions on multifamily buildings, Richmond is a tricky market to develop in for these seeking to scale STRs.

General, Richmond is best fitted to mid-term leases (MTRs) concentrating on enterprise vacationers, college students, and distant employees relatively than short-term trip leases. Traders ought to fastidiously consider compliance prices earlier than coming into this market.

Salt Lake Metropolis, UT

Market efficiency metrics:

• AirDNA market rating: 31/100 (Weak)
• Annual income (AR): $36K (+3% YOY)
• Occupancy price: 61% (+1% YOY)
• Common day by day price (ADR): $205.03 (+1% YOY)
• RevPAR: $119.57 (+2% YOY)
• Lively listings: 4,740 (+4% YOY)
• Zillow median dwelling worth: $559,027 (+2.7% YOY)
• Yield: 6% (Low)

Regulation overview: Excessive

Execs:

• Sturdy occupancy price (61%): Demand exists, notably from out of doors tourism and ski season guests.
• ADR is excessive: Serving to increase general income potential.

Cons:

• Residence costs: A median worth of $559,027 makes it tough to attain constructive money stream.
• STRs are solely allowed in business and mixed-use zones, considerably limiting accessible stock for STR buyers.

Last Verdict: D+

Salt Lake Metropolis’s short-term rental market is likely one of the riskiest on this listing as a consequence of zoning restrictions, excessive dwelling costs, and the looming risk of a statewide ban on STRs. Whereas occupancy charges and day by day income are first rate, limitations to entry are steep, and authorized dangers might make STR investments unsustainable in the long term.

Last Rating of Zillow’s STR Markets for 2025

1. Kansas Metropolis, MO: B
2. St. Louis, MO: B-
3. Charlotte, NC: B-
4. Buffalo, NY: C+
5. Philadelphia, PA: C+
6. Hartford, CT: C+
7. Richmond, VA: C+
8. Indianapolis, IN: C-
9. Windfall, RI: D+
10. Salt Lake Metropolis, UT: D+

Ought to You Put money into These STR Markets?

Should you’re new to STRs, I don’t suggest investing in any of those cities until:

• You absolutely perceive native STR laws and might navigate permits.
• You purchase an unrestricted property that isn’t susceptible to future bans.
• You understand the market properly and have a backup LTR plan.

I all the time want correct trip rental locations over cities like these. However in order for you an exit technique, excessive LTR demand and appreciation may be sturdy outs.

Last Ideas

Laws matter greater than income potential. STR-friendly trip cities are inclined to beat oversaturated metro markets. Select correctly.

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