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 the state. 

In this article, we delve into the most profitable Airbnb markets across 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 charms of San Diego, we explore strategic insights and data-driven trends that can guide both new and experienced investors towards successful ventures in the short-term rental landscape. 

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.

5 Best California Airbnb Markets

1. Palm Springs

Palm Springs is a thriving tourist destination in the southern Californian Sonoran Desert renowned for its mid-century modern architecture, hot springs, recreational opportunities and year-round sunny weather. The city's appeal as a resort town and its rich calendar of events, including the famous Coachella Valley Music and Arts Festival, contribute significantly to its high tourist numbers – 12.8 million visitors in 2021.

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 is the California side of Lake Tahoe, the premier tourist destination that also straddles Nevada. Known for its stunning natural beauty in and around Lake Tahoe and the Sierra Nevada Mountains, South Lake Tahoe draws millions of visitors each year. From skiing in winter to lake activities in Summer and scenic views all year round, South Lake Tahoe is one of the most popular destinations in the country.

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.

3. Joshua Tree

Home to the best-performing Airbnb markets for Joshua Tree National Park, one of the most popular national parks in the U.S., Joshua Tree is a census-designated place in San Bernardino County. The area's unique desert landscape, characterized by rugged rocks and iconic Joshua trees, appeals to tourists looking for outdoor adventures, spiritual retreats and artistic inspiration. Demand for short-term rentals in Joshua Tree has seen substantial growth, with a notable increase in rental revenues and occupancy rates over recent years, particularly by high-value guests.

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

The second-largest city in the state and the eighth largest in the U.S., the coastal city of San Diego is known for its gorgeous beaches, thriving cultural scene and attractions like the San Diego Zoo and Balboa Park. Known as having ‘the closest thing to perfect weather in America’, San Diego has consistently attracted about 35 million visitors each year and is one of the largest U.S. Airbnb markets.

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

Known the world over for its entertainment industry, the city of Los Angeles lies in Southern California and extends into the San Fernando Valley and the Santa Monica Mountains. The most populous U.S. city, it is a major hub for domestic and international tourism, welcoming a record 50 million visitors in 2019. The city of angels is home to over 300 museums, iconic theaters and venues, parks and the Lakers.

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 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.

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 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, 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 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.