The Best Airbnb Markets in California

With its iconic landscapes, world-class cultural attractions, and enviable climate, California is a premier destination for travelers. This vibrant allure is not just a boon for tourism but also for investors looking to capitalize on the thriving Airbnb markets in California.

In this article, we delve into the best Airbnb markets in California, examining areas where the convergence of visitor demand and unique regional attributes create prime investment opportunities. From the desert oasis of Palm Springs to the coastal charm of San Diego, we explore market trends, occupancy trends, and potential return on investment that can guide both new and experienced Airbnb investors toward successful ventures in the short-term rental market.

Tourism Potential in California

Home to iconic landmarks such as the Golden Gate Bridge and Hollywood, stunning natural wonders such as Yosemite National Park and Muir Woods, miles of spectacular coastline, renowned institutions like the Getty Museum, wine country and mild, sunny weather California attracts millions of visitors from within the state, across the U.S. and around the world.

Nearly 230 million travelers visited the Golden State in 2023 and visitation volume is expected to grow 4% in 2024. International visitation is expected to fully recover in 2024 from 15.1 million in 2023.

Home to iconic landmarks such as the Golden Gate Bridge, Hollywood, and the historic Alcatraz Island, as well as stunning natural wonders like Yosemite National Park, Lassen Volcanic National Park, Joshua Tree National Park, and Redwood National Park, California remains one of the top tourist destinations in the United States. With over 800 miles of coastline, visitors can explore breathtaking beaches, enjoy world-famous surf spots, and experience scenic drives along the Pacific Coast Highway. The state is also home to renowned institutions such as the Getty Museum, San Francisco Museum of Modern Art, and The Broad, offering visitors a rich cultural experience.

Beyond its urban appeal, California’s wine country in Napa Valley and Sonoma County continues to attract millions of visitors annually, offering exquisite wine-tasting experiences and luxury vineyard stays. Adventure seekers can enjoy outdoor activities such as hiking in Sequoia National Park, skiing in Lake Tahoe, or whale watching off the coast of Monterey Bay.

The hospitality and short-term rental market has benefited significantly from California’s booming tourism industry. The state consistently ranks as a top Airbnb investment location due to its high visitor numbers and strong occupancy rates. With theme parks like Disneyland and Universal Studios Hollywood, plus music festivals such as Coachella and Outside Lands, visitors continuously seek vacation rentals in both urban centers and nature-centric destinations.

Tourism Growth and Visitor Projections

Nearly 230 million visitors came to the Golden State in 2023, and the state’s tourism board predicts a 5% growth in 2025, with visitation numbers expected to surpass 241 million by the end of the year. With the 2026 FIFA World Cup set to have multiple matches in California cities like Los Angeles, San Francisco, and San Diego, visitor numbers are expected to increase even further. Additionally, international visitation is anticipated to fully recover by mid-2025, surpassing 17 million foreign tourists, as eased travel restrictions and global economic recovery fuel travel demand.

The economic impact of tourism in California is projected to exceed $180 billion in 2025, further boosting demand for short-term rentals. Key cities such as Los Angeles, San Francisco, and San Diego are expected to see the highest Airbnb revenue growth while emerging vacation and long beach and rental destinations such as Big Bear Lake, Lake Arrowhead, and Ventura County will continue attracting Airbnb investors due to their affordability and growing popularity among outdoor enthusiasts.

As a result, California’s Airbnb investment landscape remains highly promising, with high demand, strong revenue for potential investors, and increasing occupancy rates making it one of the most profitable short-term rental markets in the country.

1. Palm Springs

Palm Springs, a vibrant resort town in the Southern California Sonoran Desert, is one of the best Airbnb markets in California. Known for its mid-century modern architecture, luxurious hot springs, and year-round sunny weather, the city attracts millions of visitors annually, making it a high-demand short-term rental market.

Palm Springs Airbnb market trends

Palm Springs offers a mix of cultural appeal, outdoor activities, and luxury tourism, drawing both domestic and international travelers. The city is famous for its rich calendar of events, including the world-renowned Coachella Valley Music and Arts Festival, Stagecoach Festival, and Palm Springs International Film Festival, all of which contribute to strong seasonal occupancy trends.

With an impressive 12.8 million visitors in 2021, Palm Springs continues to see consistent tourism growth, making it a profitable Airbnb investment location.

According to May 2024 AirDNA data for Palm Springs:

• Average daily rate (ADR) is $495.80

• Average occupancy rate is 53%

• Average annual revenue is $49,400

• Revenue per Available Rental (RevPAR) is $250.20

The median selling price for a home in Palm Springs is $650,000 (March 2024), down 13.9% and taking 18 days less to sell compared to last year.

The Greater Palm Springs area is home to great neighborhoods such as Indian Wells, Palm Desert, Bermuda Dunes, La Quinta and Cathedral City. Indian Canyons has the most expensive homes while Racquet Club West is the most affordable.

2. South Lake Tahoe

South Lake Tahoe, located on the California side of Lake Tahoe, is a premier short-term rental market and one of the most popular Airbnb destinations in California. Situated along the border with Nevada, this region attracts millions of visitors annually due to its stunning natural beauty, recreational opportunities, and year-round appeal for outdoor enthusiasts.

South Lake Tahoe Airbnb market trends

South Lake Tahoe is renowned for its breathtaking landscapes, set against the Sierra Nevada Mountains, and offers a diverse range of seasonal activities. In the winter months, the region is a top ski destination, featuring world-class resorts such as Heavenly Mountain Resort, Kirkwood, and Sierra-at-Tahoe. During the summer, visitors flock to Lake Tahoe for boating, fishing, paddleboarding, and hiking along scenic trails, making it an attractive location for vacation rentals.

The Airbnb market in South Lake Tahoe has shown steady growth, driven by increasing occupancy trends and strong revenue potential. The area benefits from a high volume of domestic and international travelers, particularly from major metropolitan areas such as San Francisco, Sacramento, and Los Angeles.

According to May 2024 AirDNA data for South Lake Tahoe:

• Average daily rate (ADR) is $453.1

• Average occupancy rate is 53%

• Average annual revenue is $44,600

• Revenue per Available Rental (RevPAR) is $233.8

According to March 2024 Redfin data, the median sale price for a home in South Lake Tahoe is $757,000, up 18.7% and taking 19 days shorter to sell compared to last year.

Mont Estates, Tahoe Keys, Lake Tahoe, Tahoe Sierra and Tamarack are popular neighborhoods in the area. Tahoe Keys is the number one income-generating neighborhood, Zephyr Cove is the most expensive zip code and 95666 is the most affordable zip code mountain town.

3. Joshua Tree

Joshua Tree, home to one of the best-performing Airbnb markets in California, is a prime short-term rental investment location. Nestled in San Bernardino County, this desert retreat is renowned for Joshua Tree National Park, one of the most popular national parks in the U.S., drawing millions of outdoor enthusiasts, nature lovers, and adventure seekers each year.

Joshua Tree Airbnb market trends

Joshua Tree’s unique desert landscape, characterized by rugged rock formations, starry night skies, and iconic Joshua trees, makes it a prime destination for spiritual retreats, outdoor adventures, and artistic inspiration. Its close proximity to Los Angeles and Palm Springs ensures a steady influx of visitors seeking a weekend escape.

The demand for vacation rentals in Joshua Tree has surged in recent years, with rising occupancy rates and rental revenues. The region is especially popular among high-value guests, including digital nomads, luxury travelers, and eco-tourism enthusiasts.

According to May 2024 AirDNA data for Joshua Tree:

• Average daily rate (ADR) is $314.8

• Average occupancy rate is 52%

• Average annual revenue is $39,900

• Revenue per Available Rental (RevPAR) is $162.4

According to March 2024 Redfin data, the median sale price for a home in Joshua Tree is $620,000, up 63.2% and taking 30 days longer to sell compared to last year.

Joshua Tree City, 29 Palms, Yucca Valley, Palm Springs and Palm Desert are the best neighborhoods close to the park. Rancho Mirage has the most expensive homes while Twentynine Palms is the most affordable.

4. San Diego

A coastal city with a thriving short-term rental market, San Diego is the second-largest city in California and the eighth-largest in the U.S. Known for its gorgeous beaches, mild year-round climate, and world-class attractions, the city consistently ranks among the top Airbnb markets in California. With an average of 35 million visitors per year, San Diego is a prime location for Airbnb investors looking to capitalize on high occupancy trends and strong revenue potential.

San Diego Airbnb market trends

San Diego is home to major attractions such as the San Diego Zoo, Balboa Park, USS Midway Museum, and SeaWorld San Diego. The city's historic Gaslamp Quarter, Little Italy, and La Jolla attract both domestic and international travelers seeking vacation rentals near prime tourist spots. Known as having ‘the closest thing to perfect weather in America’, San Diego benefits from a year-round influx of visitors, making it one of the most profitable Airbnb investment locations.

According to May 2024 AirDNA data for San Diego:

• Average daily rate (ADR) is $333.50

• Average occupancy rate is 61%

• Average annual revenue is $36,600

• Revenue per Available Rental (RevPAR) is $193.90

The San Diego housing market is very competitive with homes receiving an average of six offers and selling in around 14 days as at March 2024. The median home sale price is $931,500, up 6.5% since last year.

La Jolla is home to the highest property prices and East Village has the most affordable homes. Popular neighborhoods include Rancho Bernardo, Carmel Valley and Pacific Beach.

5. Los Angeles

Los Angeles, known worldwide for its entertainment industry, is a thriving short-term rental market with high occupancy rates and strong investment potential. Located in Southern California, the city extends into the San Fernando Valley and the Santa Monica Mountains, offering a diverse range of attractions for visitors. As the most populous city in the U.S., Los Angeles serves as a major hub for domestic and international tourism, welcoming a record 50 million visitors in 2019 and expecting to exceed 53 million by 2025.

Los Angeles Airbnb market trends

The Airbnb market in Los Angeles benefits from the city's status as a top vacation rental destination, with key attractions including Hollywood, Venice Beach, Griffith Park, and the Los Angeles County Museum of Art (LACMA). The city is home to over 300 museums, historic theaters, iconic music venues, and world-class sports teams like the Lakers and Dodgers. Its year-round mild climate, outdoor activities, and entertainment venues make it an attractive market for Airbnb investment.

According to May 2024 AirDNA data for Los Angeles:

• Average daily rate (ADR) is $293.10

• Average occupancy rate is 54%

• Average annual revenue is $19,100

• Revenue per Available Rental (RevPAR) is $140.3

In March 2024, the median selling price of a home in suburban areas of the city of angels was $970,000, down 1.5% compared to the previous year.

Hollywood Hills West, Brentwood and Westwood are some of the best neighborhood options. Bel Air claims the highest property prices while Downtown Los Angeles claims the lowest average price.

Navigating California's Airbnb Markets

Making an Airbnb investment in California means aligning oneself with a mix of current market conditions and the potential for future growth. The process demands substantial research and a clear understanding of the local real estate dynamics. Maintaining realistic expectations and ensuring financial stability are crucial as you wait for your initial investment to yield returns.

When it comes to pinpointing lucrative opportunities, the key lies in identifying neighborhoods on the brink of transformation. Investing early in these areas can lead to above-average returns as you contribute to and benefit from their revitalization. Additionally, understanding the types of properties available and target market, defining your budget and keeping abreast of market trends are essential steps for both seasoned and novice investors alike.

If you are ready to take your business license the next step, invest in an all-in-one vacation rental software like Hostaway to manage your property efficiently and grow your Airbnb business effectively.