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

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Yearly, Zillow releases its checklist of the prime U.S. housing markets for 2025 primarily based on projected house worth progress, job developments, and purchaser competitors. For conventional actual property traders, these cities would possibly appear to be gold mines. However for short-term rental (STR) traders, the questions are fully completely 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 circulate, or will house costs eat your earnings?

A lot of Zillow’s picks aren’t trip rental sizzling 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:

• Dwelling 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 house gross sales: Markets the place properties promote the quickest

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

Nonetheless, STRs’ success depends on fully 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 discuss with a “regulation overview,” which hyperlinks to every respective metropolis’s on-line regulation data and gives 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, however it turns into harder 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 each day price (ADR): $186.5
• Occupancy price: 51%
• RevPAR: $99 (+10% YOY)
• Lively listings: 1,273 (+5% YOY)
• Zillow median house value: $224,133 (+5.5% YOY)
• Yield: 14.3%

Regulation overview: Reasonable

Professionals:

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

Cons:

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

Remaining verdict: C+

Buffalo presents reasonable STR potential as a consequence of its affordable house 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 faculty 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 each day price (ADR): $200.57 (+11% YOY)
• RevPAR: $98.58 (+13% YOY)
• Lively listings: 4,026 (+22% YOY)
• Zillow median house value: $222,887 (+3.6% YOY)

Regulation overview: Excessive

Professionals:

• Excessive investability AirDNA rating (77): Sturdy market fundamentals for actual property funding. This metric compares the price of properties utilizing Zillow house worth knowledge to the common 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 wanting on the change in year-over-year RevPAR for properties that obtained bookings in each intervals.
• ADR improve (+11% YOY): Day by day charges are rising, suggesting extra substantial host pricing energy.

Cons:

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

Remaining verdict: C-

Indianapolis has robust funding fundamentals and income progress, however robust itemizing progress and weak tourism enchantment make STRs a high-risk play. The market might develop into oversaturated, making occupancy and pricing risky. This market is finest 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 price: 59%
• Common each day price (ADR): $314.50 (-1% YOY)
• RevPAR: $189.69 (+3% YOY)
• Lively listings: 2,016 (+4% YOY)
• Zillow median house value: $403,947 (+6.3% YOY)
• Regulation overview: Excessive restrictions and zoning limitations

Regulation overview: Reasonable to excessive

Professionals:

• 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 larger than many different cities on this checklist.

Cons:

• Excessive house costs: The median house value of $403K makes producing robust STR money circulate troublesome.
• Regulatory boundaries: 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.

Remaining verdict: D+

Windfall provides robust income potential for the fitting property kind, however the excessive value of entry, regulatory complexity, and seasonal fluctuations make it a dangerous STR funding. Buyers would wish a waterfront or luxurious itemizing in a primary location to make STRs viable right here. For many, the boundaries to entry and inconsistent demand make this a weak STR market. Mid-term leases (MTRs) focusing on faculty 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 each day price (ADR): $166.64 (+3% YOY)
• RevPAR: $93.76 (+9% YOY)
• Lively listings: 939 (+17% YOY)
• Zillow median house value: $179,170 (+8.2% YOY)
• Yield: 14.7% (Good)

Regulation overview: Excessive

Professionals:

• Excessive AirDNA market rating (90): Signifies robust demand, income progress, and funding potential.
• Low house costs: In comparison with different STR markets, resulting in strong money circulate 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 develop into dearer, particularly with licensing charges, zoning permits, and insurance coverage necessities.

Remaining Verdict: C+

Hartford provides first rate STR money circulate, robust appreciation potential, and a rising rental market, however incoming rules might 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 rigorously 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 price: 54% (+6% YOY)
• Common each day price (ADR): $172.70 (+9% YOY)
• RevPAR: $95.29 (+16% YOY)
• Lively listings: 6,747 (+3% YOY)
• Zillow median house value: $218,590 (+3.9% YOY)
• Yield: 13.2% (First rate)

Regulation overview: Reasonable to excessive

Professionals:

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

Remaining Verdict: C+

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

Buyers Philadelphia should be ready to navigate zoning, permits, and compliance hurdles. The resort 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 price: 54% (+5% YOY)
• Common each day price (ADR): $176.81 (+2% YOY)
• RevPAR: $98.10 (+7% YOY)
• Lively listings: 3,325 (-9% YOY)
• Zillow median house value: $173,661 (+2.4% YOY)
• Yield: 16.8% (The most effective)

Regulation overview: Reasonable

Professionals:

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

Cons:

• New rules: May gradual 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.

Remaining Verdict: B-

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

St. Louis stays among the finest markets for STR money circulate. Nonetheless, traders 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 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 price: 55% (+10% YOY)
• Common each day price (ADR): $195.07 (+5% YOY)
• RevPAR: $109.82 (+15% YOY)
• Lively listings: 4,625 (+2% YOY)
• Zillow median house value: $393,531 (+0.9% YOY)
• Yield: 8% (Low)

Regulation overview: Reasonable to excessive

Professionals:

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

Cons:

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

Remaining Verdict: B-

Charlotte provides rising STR income progress and powerful demand, however excessive house costs and low yield make it troublesome for many traders to realize robust money circulate. The market favors luxurious, high-end STRs with distinctive facilities, whereas normal 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 (Glorious)
• Annual income (AR): $35.9K (+20% YOY)
• Occupancy price: 57% (+9% YOY)
• Common each day price (ADR): $206.41 (+11% YOY)
• RevPAR: $120.25 (+20% YOY)
• Lively listings: 2,668 (-5% YOY)
• Zillow median house value: $236,159 (+3.1% YOY)
• Yield: 15.3% (Sturdy)

Regulation overview: Reasonable

Professionals:

• Excessive income potential: Annual income is up 20% yr over yr, and RevPAR can also be rising 20%—one of many strongest progress charges on this checklist.
• 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.

Remaining Verdict: B

Kansas Metropolis stays one of many strongest STR markets on this checklist. It’s reasonably priced, has excessive income potential, and has a powerful yield. The mix of rising occupancy, robust income progress, and declining energetic listings makes it a sexy funding alternative.

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 might see substantial long-term success, however new traders ought to rigorously 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 price: 57% (+5% YOY)
• Common each day price (ADR): $173.70 (+3% YOY)
• RevPAR: $100.32 (+8% YOY)
• Lively listings: 1,579 (+7% YOY)
• Zillow median house value: $355,189 (+3.8% YOY)
• Yield: 8% (Low)

Regulation overview: Reasonable

Professionals:

• 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

• Dwelling costs: Limiting money circulate 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.

Remaining Verdict: C+

Richmond provides robust rental demand, steady occupancy, and rising income, however low money circulate, 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 tricky market to develop in for these seeking to scale STRs.

General, Richmond is best fitted to mid-term leases (MTRs) focusing on enterprise vacationers, college students, and distant staff slightly than short-term trip leases. Buyers ought to rigorously 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 each day price (ADR): $205.03 (+1% YOY)
• RevPAR: $119.57 (+2% YOY)
• Lively listings: 4,740 (+4% YOY)
• Zillow median house value: $559,027 (+2.7% YOY)
• Yield: 6% (Low)

Regulation overview: Excessive

Professionals:

• Sturdy occupancy price (61%): Demand exists, notably from outside tourism and ski season guests.
• ADR is excessive: Serving to enhance total income potential.

Cons:

• Dwelling costs: A median value of $559,027 makes it troublesome to realize optimistic money circulate.
• STRs are solely allowed in business and mixed-use zones, considerably limiting out there stock for STR traders.

Remaining Verdict: D+

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

Remaining 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?

For those who’re new to STRs, I don’t suggest investing in any of those cities except:

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

I all the time choose correct trip rental locations over cities like these. However if you’d like an exit technique, excessive LTR demand and appreciation will be robust outs.

Remaining Ideas

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