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

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Yearly, Zillow releases its record of the prime U.S. housing markets for 2025 primarily based on projected residence worth development, job traits, and purchaser competitors. For conventional actual property traders, these cities may appear to be gold mines. However for short-term rental (STR) traders, the questions are totally totally different:

• Are STRs authorized and sustainable in these cities?
• Will demand maintain robust regardless of regulation dangers?
• Are you able to really generate optimistic money stream, or will residence costs eat your earnings?

A lot of Zillow’s picks aren’t trip rental scorching spots—they’re rising, high-demand residential markets the place rules, 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 had been ranked primarily based on:

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

These components sign robust residence appreciation and purchaser demand, which is superb for home flippers or long-term landlords. 

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

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

• Mild = STR-friendly: A easy allow is the very best regulation.
• Reasonable = Proceed with warning: You are able to do STRs, but it surely turns into tougher with cap limits, permits, and restrictions, and it may 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 charge (ADR): $186.5
• Occupancy charge: 51%
• RevPAR: $99 (+10% YOY)
• Lively listings: 1,273 (+5% YOY)
• Zillow median residence value: $224,133 (+5.5% YOY)
• Yield: 14.3%

Regulation overview: Reasonable

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 affordable, with a stable yield of 14.3%.

Cons:

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

Last verdict: C+

Buffalo presents average STR potential attributable to its affordable residence costs and yield, however regulatory constraints and seasonality dangers maintain it again. It might 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 charge: 48% (+1% YOY)
• Common day by day charge (ADR): $200.57 (+11% YOY)
• RevPAR: $98.58 (+13% YOY)
• Lively listings: 4,026 (+22% YOY)
• Zillow median residence value: $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 properties utilizing Zillow residence worth knowledge to the common earnings of full-time short-term leases on Airbnb and Vrbo.
• Income development (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 improve (+11% YOY): Each day charges are rising, suggesting extra substantial host pricing energy.

Cons:

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

Last verdict: C-

Indianapolis has robust funding fundamentals and income development, however robust itemizing development and weak tourism enchantment make STRs a high-risk play. The market may change into oversaturated, making occupancy and pricing unstable. This market is greatest fitted to mid-term leases (MTRs) focusing 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 charge: 59%
• Common day by day charge (ADR): $314.50 (-1% YOY)
• RevPAR: $189.69 (+3% YOY)
• Lively listings: 2,016 (+4% YOY)
• Zillow median residence value: $403,947 (+6.3% YOY)
• Regulation overview: Excessive restrictions and zoning limitations

Regulation overview: Reasonable to excessive

Execs:

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

Cons:

• Excessive residence costs: The median residence value of $403K makes producing robust STR money stream troublesome.
• Regulatory limitations: Strict owner-occupancy guidelines and zoning limits on multifamily STRs.
• Seasonality and competitors: Demand fluctuates exterior of summer season and tutorial seasons, making year-round bookings inconsistent.

Last verdict: D+

Windfall gives robust income potential for the fitting property sort, however the excessive price of entry, regulatory complexity, and seasonal fluctuations make it a dangerous STR funding. Buyers would want a waterfront or luxurious itemizing in a major 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) focusing 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 charge: 55% (+6% YOY)
• Common day by day charge (ADR): $166.64 (+3% YOY)
• RevPAR: $93.76 (+9% YOY)
• Lively listings: 939 (+17% YOY)
• Zillow median residence value: $179,170 (+8.2% YOY)
• Yield: 14.7% (Good)

Regulation overview: Excessive

Execs:

• Excessive AirDNA market rating (90): Signifies robust demand, income development, and funding potential.
• Low residence costs: In comparison with different STR markets, resulting in stable 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 improve: At 17% yr over yr, this might sign oversaturation within the close to future.
• Regulatory tightening: STRs will change into dearer, particularly with licensing charges, zoning permits, and insurance coverage necessities.

Last Verdict: C+

Hartford gives first rate STR money stream, robust appreciation potential, and a rising rental market, however incoming rules may make it extra expensive and difficult to function legally. Buyers should 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, traders 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 (Reasonable)
• Annual income (AR): $28.6K (+15% YOY)
• Occupancy charge: 54% (+6% YOY)
• Common day by day charge (ADR): $172.70 (+9% YOY)
• RevPAR: $95.29 (+16% YOY)
• Lively listings: 6,747 (+3% YOY)
• Zillow median residence value: $218,590 (+3.9% YOY)
• Yield: 13.2% (Respectable)

Regulation overview: Reasonable to excessive

Execs:

• Above-average tourism demand: Constant year-round bookings pushed by historical past, sports activities, enterprise journey, and vital occasions.
• Sturdy income development: 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.
• Difficult allow course of: A number of licenses and zoning approvals.

Last Verdict: C+

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

Buyers Philadelphia should be ready to navigate zoning, permits, and compliance hurdles. The lodge tax and metropolis enforcement of rules 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 (Reasonable)
• Annual income (AR): $29K (+7% YOY)
• Occupancy charge: 54% (+5% YOY)
• Common day by day charge (ADR): $176.81 (+2% YOY)
• RevPAR: $98.10 (+7% YOY)
• Lively listings: 3,325 (-9% YOY)
• Zillow median residence value: $173,661 (+2.4% YOY)
• Yield: 16.8% (Among the best)

Regulation overview: Reasonable

Execs:

• Excessive STR yields: These are at 16.8%, because of reasonably priced residence costs and substantial rental earnings.
• Listings decline: This quantity went down 9% YoY, indicating a possible discount in competitors as new rules take impact.

Cons:

• New rules: May sluggish STR funding, significantly for non-owner-occupied properties.
• Two-night minimal keep requirement: This might restrict flexibility and cut 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 traders, with low residence costs, excessive rental yields, and regular demand. Nonetheless, new rules may make it more durable for traders to enter and function profitably in the long term.

St. Louis stays probably the greatest markets for STR money stream. Nonetheless, traders ought to carefully watch regulatory developments and guarantee their STRs adjust to new allowing and enforcement measures. Those that navigate the brand new guidelines may nonetheless see robust 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 charge: 55% (+10% YOY)
• Common day by day charge (ADR): $195.07 (+5% YOY)
• RevPAR: $109.82 (+15% YOY)
• Lively listings: 4,625 (+2% YOY)
• Zillow median residence value: $393,531 (+0.9% YOY)
• Yield: 8% (Low)

Regulation overview: Reasonable to excessive

Execs:

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

Cons:

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

Last Verdict: B-

Charlotte gives rising STR income development and robust demand, however excessive residence costs and low yield make it troublesome for many traders to realize robust money stream. The market favors luxurious, high-end STRs with distinctive facilities, whereas commonplace listings might battle with profitability.

For traders contemplating Charlotte, you’ll want to consider taxes, zoning restrictions, and residential costs earlier than coming into the market. Mid-term leases (MTRs) focusing 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 charge: 57% (+9% YOY)
• Common day by day charge (ADR): $206.41 (+11% YOY)
• RevPAR: $120.25 (+20% YOY)
• Lively listings: 2,668 (-5% YOY)
• Zillow median residence value: $236,159 (+3.1% YOY)
• Yield: 15.3% (Sturdy)

Regulation overview: Reasonable

Execs:

• Excessive income potential: Annual income is up 20% yr over yr, and RevPAR can be rising 20%—one of many strongest development charges on this record.
• 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 rules 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 record. It’s reasonably priced, has excessive income potential, and has a powerful yield. The mix of rising occupancy, robust income development, and declining energetic listings makes it a sexy funding selection.

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

Richmond, VA 

Market efficiency metrics:

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

Regulation overview: Reasonable

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 troublesome to realize robust ROI.
• Low yield (8%): Most traders will battle to realize robust short-term returns.
• Strict owner-occupied guidelines: In residential zones, it’s robust for full-time traders to function STRs.

Last Verdict: C+

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

STRs solely make sense for owner-occupied hosts or traders focusing on nonresidential zones, the place there’s extra flexibility. On account of zoning restrictions on multifamily buildings, Richmond is a troublesome market to develop in for these trying to scale STRs.

General, Richmond is healthier fitted to mid-term leases (MTRs) focusing on enterprise vacationers, college students, and distant employees reasonably than short-term trip leases. Buyers 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 charge: 61% (+1% YOY)
• Common day by day charge (ADR): $205.03 (+1% YOY)
• RevPAR: $119.57 (+2% YOY)
• Lively listings: 4,740 (+4% YOY)
• Zillow median residence value: $559,027 (+2.7% YOY)
• Yield: 6% (Low)

Regulation overview: Excessive

Execs:

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

Cons:

• Residence costs: A median value of $559,027 makes it troublesome to realize optimistic money stream.
• STRs are solely allowed in industrial and mixed-use zones, considerably limiting obtainable stock for STR traders.

Last Verdict: D+

Salt Lake Metropolis’s short-term rental market is without doubt one of the riskiest on this record attributable to zoning restrictions, excessive residence 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 may 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?

In the event you’re new to STRs, I don’t advocate investing in any of those cities until:

• You absolutely perceive native STR rules and may navigate permits.
• You purchase an unrestricted property that isn’t susceptible to future bans.
• You realize the market effectively and have a backup LTR plan.

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

Last Ideas

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