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

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Yearly, Zillow releases its checklist of the high U.S. housing markets for 2025 based mostly on projected residence worth development, job tendencies, 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 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 move, 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 based mostly on:

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

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

Nevertheless, 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 confer with a “regulation overview,” which hyperlinks to every respective metropolis’s on-line regulation data and supplies my overview of how strict its rules 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, nevertheless it turns into tougher with cap limits, permits, and restrictions, and it may change at any second.
• Heavy = Robust opposition to STRs: Larger charges and extra necessities to be allowed to function.

With out any additional ado, right here’s a breakdown of Zillow’s high 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 fee (ADR): $186.5
• Occupancy fee: 51%
• RevPAR: $99 (+10% YOY)
• Lively listings: 1,273 (+5% YOY)
• Zillow median residence worth: $224,133 (+5.5% YOY)
• Yield: 14.3%

Regulation overview: Average

Professionals:

• Potential fallback plan: May work as a long-term rental if STR fails.
• Vacationer demand: Proximity to Niagara Falls supplies 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 certainly one of Zillow’s high markets, competitors is rising.

Closing verdict: C+

Buffalo presents reasonable STR potential as a consequence of its affordable residence 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 faculty renters.

Indianapolis, IN

Market efficiency metrics:

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

Regulation overview: Excessive

Professionals:

• Excessive investability AirDNA rating (77): Robust market fundamentals for actual property funding. This metric compares the price of properties utilizing Zillow residence worth knowledge to the typical 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 acquired bookings in each durations.
• 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 may outpace demand.
• Tourism drawbacks: No standout vacationer points of interest that drive year-round demand except you’re a race automotive fanatic.

Closing 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 turn out to be oversaturated, making occupancy and pricing unstable. This market is greatest suited 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 fee: 59%
• Common each day fee (ADR): $314.50 (-1% YOY)
• RevPAR: $189.69 (+3% YOY)
• Lively listings: 2,016 (+4% YOY)
• Zillow median residence worth: $403,947 (+6.3% YOY)
• Regulation overview: Excessive restrictions and zoning limitations

Regulation overview: Average to excessive

Professionals:

• 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 increased than many different cities on this checklist.

Cons:

• Excessive residence costs: The median residence worth of $403K makes producing robust STR money move troublesome.
• 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.

Closing verdict: D+

Windfall gives robust income potential for the precise property kind, however the excessive value 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 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 (Robust)
• Annual income (AR): $26.5K (+10% YOY)
• Occupancy fee: 55% (+6% YOY)
• Common each day fee (ADR): $166.64 (+3% YOY)
• RevPAR: $93.76 (+9% YOY)
• Lively listings: 939 (+17% YOY)
• Zillow median residence worth: $179,170 (+8.2% YOY)
• Yield: 14.7% (Good)

Regulation overview: Excessive

Professionals:

• 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 move 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% 12 months over 12 months, this might sign oversaturation within the close to future.
• Regulatory tightening: STRs will turn out to be dearer, particularly with licensing charges, zoning permits, and insurance coverage necessities.

Closing Verdict: C+

Hartford gives respectable STR money move, robust appreciation potential, and a rising rental market, however incoming rules may 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, traders ought to fastidiously weigh long-term STR viability earlier than getting 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 fee: 54% (+6% YOY)
• Common each day fee (ADR): $172.70 (+9% YOY)
• RevPAR: $95.29 (+16% YOY)
• Lively listings: 6,747 (+3% YOY)
• Zillow median residence worth: $218,590 (+3.9% YOY)
• Yield: 13.2% (First rate)

Regulation overview: Average to excessive

Professionals:

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

Closing 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 likelihood of success, whereas common listings wrestle to face out.

Traders taking a look at 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 (Average)
• Annual income (AR): $29K (+7% YOY)
• Occupancy fee: 54% (+5% YOY)
• Common each day fee (ADR): $176.81 (+2% YOY)
• RevPAR: $98.10 (+7% YOY)
• Lively listings: 3,325 (-9% YOY)
• Zillow median residence worth: $173,661 (+2.4% YOY)
• Yield: 16.8% (The most effective)

Regulation overview: Average

Professionals:

• 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 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.

Closing Verdict: B-

St. Louis has been a top-tier money move marketplace for STR traders, with low residence costs, excessive rental yields, and regular demand. Nevertheless, 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 move. 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 growing restrictions.

Charlotte, NC

Market efficiency metrics:

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

Regulation overview: Average to excessive

Professionals:

• Excessive income development: Annual income is up 14% YoY, and RevPAR is rising by 15%.
• Occupancy fee: 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 move is difficult.
• Low yield (8%): Traders could wrestle to interrupt even, particularly with mortgage prices.

Closing Verdict: B-

Charlotte gives rising STR income development and powerful demand, however excessive residence costs and low yield make it troublesome for many traders to attain robust money move. The market favors luxurious, high-end STRs with distinctive facilities, whereas customary listings could wrestle with profitability.

For traders contemplating Charlotte, make sure to think about taxes, zoning restrictions, and residential costs earlier than getting into the market. Mid-term leases (MTRs) concentrating on enterprise professionals, medical vacationers, and company relocations could present a extra steady different on this rising metropolis.

Kansas Metropolis, MO 

Market efficiency metrics:

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

Regulation overview: Average

Professionals:

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

Cons:

• Kansas Metropolis is growing STR oversight, and rules could tighten additional.
• Zoning legal guidelines: Significantly in residential areas with STR limitations.

Closing 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 development, and declining energetic listings makes it a sexy funding selection.

Nevertheless, potential regulatory shifts and growing metropolis oversight imply traders should keep knowledgeable and guarantee compliance to keep away from expensive fines or shutdowns. Those that safe the precise 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 (Robust)
• Annual income (AR): $29.3K (+9% YOY)
• Occupancy fee: 57% (+5% YOY)
• Common each day fee (ADR): $173.70 (+3% YOY)
• RevPAR: $100.32 (+8% YOY)
• Lively listings: 1,579 (+7% YOY)
• Zillow median residence worth: $355,189 (+3.8% YOY)
• Yield: 8% (Low)

Regulation overview: Average

Professionals:

• Robust 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 move potential and making it troublesome to attain robust ROI.
• Low yield (8%): Most traders will wrestle to attain robust short-term returns.
• Strict owner-occupied guidelines: In residential zones, it’s powerful for full-time traders to function STRs.

Closing Verdict: C+

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

STRs solely make sense for owner-occupied hosts or traders concentrating on nonresidential zones, the place there may be 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.

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

Salt Lake Metropolis, UT

Market efficiency metrics:

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

Regulation overview: Excessive

Professionals:

• Robust occupancy fee (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 troublesome to attain optimistic money move.
• STRs are solely allowed in business and mixed-use zones, considerably limiting accessible stock for STR traders.

Closing Verdict: D+

Salt Lake Metropolis’s short-term rental market is without doubt one of the riskiest on this checklist as a consequence of zoning restrictions, excessive residence costs, and the looming menace of a statewide ban on STRs. Whereas occupancy charges and each day income are respectable, limitations to entry are steep, and authorized dangers may make STR investments unsustainable in the long term.

Closing 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 Spend money on These STR Markets?

If you happen to’re new to STRs, I don’t suggest investing in any of those cities except:

• You totally perceive native STR rules and may navigate permits.
• You purchase an unrestricted property that isn’t vulnerable to future bans.
• the market nicely 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 robust outs.

Closing Ideas

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