If 2024 was a wake-up call for short-term rental investors, 2025 is the year to take action, according to AirDNA’s 2025 Best Places to Invest in Short-Term Rentals report.
After seeing promising growth in previous years, the market hit a wall in 2024 as new listings slowed significantly, growing just 6.8% nationwide, the report reveals. That figure is a little over half of 14.4% growth from 2023 and less than one-third of 22.1% growth in 2022.
Why the slowdown? AirDNA says that investors were up against higher interest rates, increasing home prices, and a slowdown in revenue growth — all of which made it difficult to invest in properties. The U.S. housing shortage restricted the availability of investment properties.
These problems are unlikely to fade in 2025, with 30-year mortgage rates reaching 7% this month and Oxford Economics projecting home values to rise another 4.9%.
2025 Outlook
But AirDNA says investors have reasons to be optimistic. Occupancy rates have stabilized and revenue per available rental (RevPAR) growth in 2024 turned positive once again. A rise in demand outpaced supply growth (as new listings slowed that year).
2024 also saw small and mid-sized cities emerging as the strongest performers. Government regulations limited growth in major metro areas, the report found, while listings in small city and rural areas grew by 16%, and mid-sized cities saw a 10.3% increase. These areas attracted investors looking for more affordable properties with strong rental demand.
AirDNA findings show that a major trend influencing the market is the rise of larger short-term rental listings, especially in urban and mid-sized cities. Local regulations and traveler demand spearheaded the shift, with new, higher-priced large homes becoming more common and pushing average daily rates (ADR) higher.
In smaller cities and suburban areas, however, preferences for property sizes are more diverse. Rural markets have seen the strongest growth in six-bedroom or larger homes, which are especially popular with groups of travelers. These larger rentals offer a cost-effective alternative to booking multiple hotel rooms, making them a top choice for budget-conscious vacationers.
AirDNA projects that rising real incomes and stronger consumer confidence will drive increased traveler demand, and that the market will continue to build on the stabilization gained in 2024.
Occupancy rates are expected to make steady gains toward pre-pandemic levels of 56% by the end of the year. ADR and RevPAR are also forecasted to increase, bringing a stronger revenue outlook for investors — especially as high mortgage rates and rising home values continue to push up property acquisition costs.
Top 10 U.S. Cities for Short-Term Rental Investment in 2025
1. Peoria, Illinois
2. Fairbanks, Alaska
3. Akron, Ohio
4. Columbus, Georgia
5. Crescent City, California
6. Shreveport, Louisiana
7. Page, Arizona
8. Rockford, Illinois
9. Dayton, Ohio
10. Frankfort, Kentucky
