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

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Every year, Zillow releases its list of the top U.S. housing markets for 2025 based on projected home value growth, job trends, and buyer competition. For traditional real estate investors, these cities might seem like gold mines. But for short-term rental (STR) investors, the questions are entirely different:

• Are STRs legal and sustainable in these cities?
• Will demand hold strong despite regulation risks?
• Can you actually generate positive cash flow, or will home prices eat your profits?

Many of Zillow’s picks aren’t vacation rental hot spots—they’re growing, high-demand residential markets where regulations, taxes, and competition can complicate STR investing. So, do any of them work for STRs?

How Zillow Chose These Markets

Zillow’s 2025 hottest markets were ranked based on:

• Home value growth: Projected appreciation for 2025
• Owner-occupied household growth: More permanent residents moving in
• Job growth vs. new construction: Demand for housing outpacing new builds
• Speed of home sales: Markets where homes sell the fastest

These factors signal strong home appreciation and buyer demand, which is excellent for house flippers or long-term landlords. 

However, STRs’ success relies on entirely different factors: occupancy rates, seasonality, legal restrictions, and affordability. We use data from AirDNA and Zillow (data from March 13, 2025)  to develop our ranking system and compare it to other markets.

I refer to a “regulation overview,” which links to each respective city’s online regulation information and provides my overview of how strict its regulations may be compared to those of other markets.

• Light = STR-friendly: A simple permit is the highest regulation.
• Moderate = Proceed with caution: You can do STRs, but it becomes more difficult with cap limits, permits, and restrictions, and it could switch at any moment.
• Heavy = Strong opposition to STRs: Higher fees and more requirements to be allowed to operate.

Without any further ado, here’s a breakdown of Zillow’s top 10 markets and their viability as STRs.

Buffalo, NY

Market performance metrics:

• AirDNA score: 41/100 (Low)
• Annual revenue (AR): $29,500 (+11% YOY)
• Average daily rate (ADR): $186.5
• Occupancy rate: 51%
• RevPAR: $99 (+10% YOY)
• Active listings: 1,273 (+5% YOY)
• Zillow median home price: $224,133 (+5.5% YOY)
• Yield: 14.3%

Regulation overview: Moderate

Pros:

• Potential fallback plan: Could work as a long-term rental if STR fails.
• Tourist demand: Proximity to Niagara Falls provides some demand.
• Affordability: Home prices are reasonable, with a solid yield of 14.3%.

Cons:

• Seasonality: Likely impacted by colder months, reducing occupancy.
• Regulatory hurdles: Permit requirements and registration add friction for investors.
• Booming market: As one of Zillow’s top markets, competition is rising.

Final verdict: C+

Buffalo presents moderate STR potential due to its reasonable home prices and yield, but regulatory constraints and seasonality risks hold it back. It may work better as a hybrid STR plus mid-term rental (MTR) strategy catering to traveling professionals, nurses, or college renters.

Indianapolis, IN

Market performance metrics:

• AirDNA market score: 83/100 (Good)
• Annual revenue (AR): $28.7K (+12% YOY)
• Occupancy rate: 48% (+1% YOY)
• Average daily rate (ADR): $200.57 (+11% YOY)
• RevPAR: $98.58 (+13% YOY)
• Active listings: 4,026 (+22% YOY)
• Zillow median home price: $222,887 (+3.6% YOY)

Regulation overview: High

Pros:

• High investability AirDNA score (77): Strong market fundamentals for real estate investment. This metric compares the cost of homes using Zillow home value data to the average income of full-time short-term rentals on Airbnb and Vrbo.
• Revenue growth (92): One of the highest-growing revenue markets. We calculate this by looking at the change in year-over-year RevPAR for properties that received bookings in both periods.
• ADR increase (+11% YOY): Daily rates are rising, suggesting more substantial host pricing power.

Cons:

• Oversaturation risk: Listings grew 22% YOY, meaning competition could outpace demand.
• Tourism drawbacks: No standout tourist attractions that drive year-round demand unless you are a race car enthusiast.

Final verdict: C-

Indianapolis has strong investment fundamentals and revenue growth, but strong listing growth and weak tourism appeal make STRs a high-risk play. The market could become oversaturated, making occupancy and pricing volatile. This market is best suited for mid-term rentals (MTRs) targeting traveling professionals, sports events, and conventions.

Providence, RI 

Market performance metrics:

• AirDNA market score: 21/100 (Weak)
• Annual revenue (AR): $47.4K (+5% YOY)
• Occupancy rate: 59%
• Average daily rate (ADR): $314.50 (-1% YOY)
• RevPAR: $189.69 (+3% YOY)
• Active listings: 2,016 (+4% YOY)
• Zillow median home price: $403,947 (+6.3% YOY)
• Regulation overview: High restrictions and zoning limitations

Regulation overview: Moderate to high

Pros:

• High revenue potential: One of the highest ADRs in this ranking ($314.50) and solid annual revenue ($47.4K).
• Growing rental demand: Occupancy rates are higher than many other cities on this list.

Cons:

• High home prices: The median home price of $403K makes generating strong STR cash flow difficult.
• Regulatory barriers: Strict owner-occupancy rules and zoning limits on multifamily STRs.
• Seasonality and competition: Demand fluctuates outside of summer and academic seasons, making year-round bookings inconsistent.

Final verdict: D+

Providence offers strong revenue potential for the right property type, but the high cost of entry, regulatory complexity, and seasonal fluctuations make it a risky STR investment. Investors would need a waterfront or luxury listing in a prime location to make STRs viable here. For most, the barriers to entry and inconsistent demand make this a weak STR market. Mid-term rentals (MTRs) targeting college students, professors, or corporate travelers may be a better option in this area.

Hartford, CT

Market performance metrics:

• AirDNA market score: 90/100 (Strong)
• Annual revenue (AR): $26.5K (+10% YOY)
• Occupancy rate: 55% (+6% YOY)
• Average daily rate (ADR): $166.64 (+3% YOY)
• RevPAR: $93.76 (+9% YOY)
• Active listings: 939 (+17% YOY)
• Zillow median home price: $179,170 (+8.2% YOY)
• Yield: 14.7% (Good)

Regulation overview: High

Pros:

• High AirDNA market score (90): Indicates strong demand, revenue growth, and investment potential.
• Low home prices: Compared to other STR markets, leading to solid cash flow potential.
• Annual revenue: For a low-cost market, it checks out, and the 14.7% yield is a strong return on investment.

Cons:

• Listings increase: At 17% year over year, this could signal oversaturation in the near future.
• Regulatory tightening: STRs will become more expensive, especially with licensing fees, zoning permits, and insurance requirements.

Final Verdict: C+

Hartford offers decent STR cash flow, strong appreciation potential, and a growing rental market, but incoming regulations could make it more costly and challenging to operate legally. Investors must be diligent about zoning, permits, and compliance to avoid fines or operational shutdowns. 

Given the rising competition and the potential for more restrictions, investors should carefully weigh long-term STR viability before entering the market. Mid-term rentals (MTRs) catering to professionals, traveling nurses, and students may be a safer, more stable option in this market.

Philadelphia, PA 

Market performance metrics:

• AirDNA market score: 70/100 (Moderate)
• Annual revenue (AR): $28.6K (+15% YOY)
• Occupancy rate: 54% (+6% YOY)
• Average daily rate (ADR): $172.70 (+9% YOY)
• RevPAR: $95.29 (+16% YOY)
• Active listings: 6,747 (+3% YOY)
• Zillow median home price: $218,590 (+3.9% YOY)
• Yield: 13.2% (Decent)

Regulation overview: Moderate to high

Pros:

• Above-average tourism demand: Consistent year-round bookings driven by history, sports, business travel, and significant events.
• Strong revenue growth: Annual revenue is up 15% yearly, and RevPAR is increasing by 16%.

Cons:

• 6,747 active listings: Up 3% YOY, making it harder for new hosts to stand out.
• Complicated permit process: Multiple licenses and zoning approvals.

Final Verdict: C+

Philadelphia’s short-term rental market offers strong revenue potential but comes with heavy competition, strict regulations, and tax burdens. Unique, high-end, and experience-driven properties have the best chance of success, while average listings struggle to stand out.

Investors looking at Philadelphia must be prepared to navigate zoning, permits, and compliance hurdles. The hotel tax and city enforcement of regulations add costs and risks, making this a better market for premium STRs or mid-term rentals (MTRs) catering to business travelers, medical professionals, and long-term tourists.

St. Louis, MO

Market performance metrics:

• AirDNA market score: 71/100 (Moderate)
• Annual revenue (AR): $29K (+7% YOY)
• Occupancy rate: 54% (+5% YOY)
• Average daily rate (ADR): $176.81 (+2% YOY)
• RevPAR: $98.10 (+7% YOY)
• Active listings: 3,325 (-9% YOY)
• Zillow median home price: $173,661 (+2.4% YOY)
• Yield: 16.8% (One of the best)

Regulation overview: Moderate

Pros:

• High STR yields: These are at 16.8%, thanks to affordable home prices and substantial rental income.
• Listings decline: This number went down 9% YoY, indicating a potential reduction in competition as new regulations take effect.

Cons:

• New regulations: Could slow STR investment, particularly for non-owner-occupied properties.
• Two-night minimum stay requirement: This could limit flexibility and reduce bookings from one-night business travelers in some areas.

Final Verdict: B-

St. Louis has been a top-tier cash flow market for STR investors, with low home prices, high rental yields, and steady demand. However, new regulations could make it harder for investors to enter and operate profitably in the long run.

St. Louis remains one of the best markets for STR cash flow. Still, investors should closely watch regulatory developments and ensure their STRs comply with new permitting and enforcement measures. Those who navigate the new rules could still see strong returns, but non-owner-occupied STRs will face increasing restrictions.

Charlotte, NC

Market performance metrics:

• AirDNA market score: 92/100 (Strong)
• Annual revenue (AR): $32.1K (+14% YOY)
• Occupancy rate: 55% (+10% YOY)
• Average daily rate (ADR): $195.07 (+5% YOY)
• RevPAR: $109.82 (+15% YOY)
• Active listings: 4,625 (+2% YOY)
• Zillow median home price: $393,531 (+0.9% YOY)
• Yield: 8% (Low)

Regulation overview: Moderate to high

Pros:

• High revenue growth: Annual revenue is up 14% YoY, and RevPAR is growing by 15%.
• Occupancy rate: Increasing, suggesting strong demand.
• Growing tourism and business travel: Driven by Charlotte’s financial sector, sports teams, and events.

Cons:

• Home prices: Generating strong STR cash flow is challenging.
• Low yield (8%): Investors may struggle to break even, especially with mortgage costs.

Final Verdict: B-

Charlotte offers rising STR revenue growth and strong demand, but high home prices and low yield make it difficult for most investors to achieve strong cash flow. The market favors luxury, high-end STRs with unique amenities, while standard listings may struggle with profitability.

For investors considering Charlotte, be sure to factor in taxes, zoning restrictions, and home prices before entering the market. Mid-term rentals (MTRs) targeting business professionals, medical travelers, and corporate relocations may provide a more stable alternative in this growing city.

Kansas City, MO 

Market performance metrics:

• AirDNA market score: 98/100 (Excellent)
• Annual revenue (AR): $35.9K (+20% YOY)
• Occupancy rate: 57% (+9% YOY)
• Average daily rate (ADR): $206.41 (+11% YOY)
• RevPAR: $120.25 (+20% YOY)
• Active listings: 2,668 (-5% YOY)
• Zillow median home price: $236,159 (+3.1% YOY)
• Yield: 15.3% (Strong)

Regulation overview: Moderate

Pros:

• High revenue potential: Annual revenue is up 20% year over year, and RevPAR is also increasing 20%—one of the strongest growth rates on this list.
• Demand increasing: Occupancy is up 9% YOY, suggesting a healthy short-term rental market.
• Consistent tourism: Strong local sports, music, and food scene.

Cons:

• Kansas City is increasing STR oversight, and regulations may tighten further.
• Zoning laws: Particularly in residential areas with STR limitations.

Final Verdict: B

Kansas City remains one of the strongest STR markets on this list. It is affordable, has high revenue potential, and has a strong yield. The combination of rising occupancy, strong revenue growth, and declining active listings makes it an attractive investment choice.

However, potential regulatory shifts and increasing city oversight mean investors must stay informed and ensure compliance to avoid costly fines or shutdowns. Those who secure the right property in a favorable zoning area could see substantial long-term success, but new investors should carefully evaluate neighborhood regulations before buying.

Richmond, VA 

Market performance metrics:

• AirDNA market score: 89/100 (Strong)
• Annual revenue (AR): $29.3K (+9% YOY)
• Occupancy rate: 57% (+5% YOY)
• Average daily rate (ADR): $173.70 (+3% YOY)
• RevPAR: $100.32 (+8% YOY)
• Active listings: 1,579 (+7% YOY)
• Zillow median home price: $355,189 (+3.8% YOY)
• Yield: 8% (Low)

Regulation overview: Moderate

Pros:

• Strong STR demand: High occupancy (57%) and rising revenue (+9% YOY).
• High tourism and rental demand: A growing arts, food, and history scene brings visitors year-round.

Cons

• Home prices: Limiting cash flow potential and making it difficult to achieve strong ROI.
• Low yield (8%): Most investors will struggle to achieve strong short-term returns.
• Strict owner-occupied rules: In residential zones, it’s tough for full-time investors to operate STRs.

Final Verdict: C+

Richmond offers strong rental demand, stable occupancy, and rising revenue, but low cash flow, strict zoning laws, and high permit costs make STR investing difficult.

STRs only make sense for owner-occupied hosts or investors targeting nonresidential zones, where there is more flexibility. Due to zoning restrictions on multifamily buildings, Richmond is a tough market to grow in for those looking to scale STRs.

Overall, Richmond is better suited for mid-term rentals (MTRs) targeting business travelers, students, and remote workers rather than short-term vacation rentals. Investors should carefully evaluate compliance costs before entering this market.

Salt Lake City, UT

Market performance metrics:

• AirDNA market score: 31/100 (Weak)
• Annual revenue (AR): $36K (+3% YOY)
• Occupancy rate: 61% (+1% YOY)
• Average daily rate (ADR): $205.03 (+1% YOY)
• RevPAR: $119.57 (+2% YOY)
• Active listings: 4,740 (+4% YOY)
• Zillow median home price: $559,027 (+2.7% YOY)
• Yield: 6% (Low)

Regulation overview: High

Pros:

• Strong occupancy rate (61%): Demand exists, particularly from outdoor tourism and ski season visitors.
• ADR is high: Helping boost overall revenue potential.

Cons:

• Home prices: A median price of $559,027 makes it difficult to achieve positive cash flow.
• STRs are only allowed in commercial and mixed-use zones, significantly limiting available inventory for STR investors.

Final Verdict: D+

Salt Lake City’s short-term rental market is one of the riskiest on this list due to zoning restrictions, high home prices, and the looming threat of a statewide ban on STRs. While occupancy rates and daily revenue are decent, barriers to entry are steep, and legal risks could make STR investments unsustainable in the long run.

Final Ranking of Zillow’s STR Markets for 2025

1. Kansas City, 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. Providence, RI: D+
10. Salt Lake City, UT: D+

Should You Invest in These STR Markets?

If you’re new to STRs, I don’t recommend investing in any of these cities unless:

• You fully understand local STR regulations and can navigate permits.
• You buy an unrestricted property that isn’t at risk of future bans.
• You know the market well and have a backup LTR plan.

I always prefer proper vacation rental destinations over cities like these. But if you want an exit strategy, high LTR demand and appreciation can be strong outs.

Final Thoughts

Regulations matter more than revenue potential. STR-friendly vacation towns tend to beat oversaturated metro markets. Choose wisely.