The 5 Best Housing Markets For Short-Term Rentals in 2025

In This Article

AirDNA recently released its annual report on the Best Places to Invest in Vacation Rentals, providing valuable insights into the markets investors should target. While the list highlights several high-performing areas, diving deeper into the data reveals trends that should give both optimism and caution to real estate investors. 

The Risk of Oversaturation

A key metric in this report is listing growth. Some of these markets have been constantly highlighted and even made the list with mind-boggling growth. 

My concern is whether these markets can sustain the availability of rooms even if their demand is rising. In markets with exceptionally high listing growth, it often signals a flood of new investors chasing potential profits. While this may reflect a thriving market, it can also lead to oversaturation. Too many listings in a single area can drive down occupancy rates and even inflate property prices, leaving investors at risk of overpaying for assets that can’t sustain long-term profitability. 

Why RevPAR Matters

For me, the standout metric is revenue per available rental (RevPAR). RevPAR combines occupancy and average daily rates (ADR), showing how much a property could earn. It reflects actual demand, providing a clearer picture of what investors can expect. Markets with strong RevPAR growth demonstrate that guests are booking at favorable rates.

Yield %: The Investment Litmus Test

Another critical metric is yield percentage, calculated by dividing annual revenue by the property’s median home price. This provides a tangible sense of the potential return on investment. 

High-yield markets are particularly appealing for investors looking to maximize returns without overleveraging. These blanket averages can be tricky, as sometimes the average properties in the area do not compete with even the average revenue earners. You may purchase a property that seems like a steal but quickly realize how much money you will need to put into it just to compete. 

My Top Five Markets

Based on the data and my calculations, here are my top five markets from AirDNA’s report, ranked in order:

5. Kansas City, Missouri

• RevPAR: $151.25
• RevPAR % increase (2023 to 2024): 13.8%
• Occupancy rate: 59.7%
• ADR: $253.47
• Annual potential revenue: $44,142
• Active listings (as of 1/24/25): 4,900
• Listing growth (2023 to 2024): -0.4%
• Yield %: 12.1%

Kansas City offers a solid balance between affordability and potential profitability. This city attracts consistent demand, particularly from travelers interested in its growing culinary scene, cultural attractions, and sports events. 

The ADR makes KC an appealing option for budget-conscious tourists, while the active listing count has declined. This could be due to tightening regulations in the area, which should be noted.

4. Montgomery, Alabama

• RevPAR: $102.99
• RevPAR % increase (2023 to 2024): 14.5%
• Occupancy rate: 54.6%
• ADR: $188.69
• Annual potential revenue: $32,998
• Active listings (as of 1/24/25): 867
• Listing growth (2023 to 2024): 28.9%
• Yield %: 11.3%

Montgomery stands out for its affordability in terms of real estate and travel. The city’s metrics reflect moderate demand, primarily fueled by its rich history and role as a cultural hub. 

With a moderate ADR and less than 1,000 active listings, there’s less competition compared to larger cities, making it an attractive choice for investors looking to break into smaller, underserved markets. The annual revenue suggests a decent yield when paired with Montgomery’s relatively low housing costs. The extremely high listing growth is staggering and could disappoint new investors with their occupancy levels.

3. Tampa, Florida

• RevPAR: $176.10
• RevPAR % increase (2023 to 2024): 13.7%
• Occupancy rate: 62.1%
• ADR: $283.72
• Annual potential revenue: $51,587
• Active listings (as of 1/24/25): 12,200
• Listing growth (2023 to 2024): 3.7%
• Yield %: 9.3%

Tampa is a vacation hot spot, offering a mix of beaches, cultural attractions, and year-round sunshine. It has a strong demand that supports its relatively high ADR. 

However, the 12,000+ active listings signal heavy competition, meaning only well-maintained, strategically priced properties will thrive here. The annual revenue makes Tampa a higher-reward market, but investors should be cautious about oversaturation.

2. Columbus, Ohio

• RevPAR: $147.34
• RevPAR % increase (2023 to 2024): 14%
• Occupancy rate: 54.4%
• ADR: $270.88
• Annual potential revenue: $39,021
• Active listings (as of 1/24/25): 5,400
• Listing growth (2023 to 2024): 17.8%
• Yield %: 10.4%

As a rising urban center, Columbus is gaining the attention of tourists and business travelers. The city boasts balanced demand throughout the year with a solid ADR. It was a white-hot spot last year, and a higher listing growth shows it could be heading toward dreaded oversaturation territory in the home of the Buckeyes. Columbus is particularly attractive for those looking to diversify their portfolios in a market with low barriers to entry. 

1. Page, Arizona

• RevPAR: $188.72
• RevPAR % increase (2023 to 2024): 11.2%
• Occupancy rate: 62.1%
• ADR: $303.96
• Annual potential revenue: $47,243
• Active listings (as of 1/24/25): 564
• Listing growth (2023 to 2024): 9.7%
• Yield %: 11%

Page, located near iconic landmarks like Lake Powell and Antelope Canyon, is a top-tier destination for nature enthusiasts and photographers. The city can attract high-value travelers with a higher RevPAR and ADR than most on the list. Its 564 active listings indicate lower competition than urban markets, while the $47,243 annual potential revenue solidifies its place as one of the most profitable STR markets. Investors targeting unique, adventure-focused experiences will find Page an exceptional choice.

Balancing Opportunity and Risk

While AirDNA’s report highlights promising markets, weighing metrics like RevPAR and yield % against risks like listing growth is essential. Markets with strong demand and controlled supply offer the best opportunities, but oversaturated areas could leave investors scrambling to compete.

By focusing on actionable metrics and staying disciplined with market analysis, investors can position themselves for success, even in rapidly changing markets.