AirDNA 2026 Report: Why Small Cities Beat Beach Towns for STR Returns

I've been investing in short-term rentals (STRs) for over a decade now. And I'll be honest — when I first saw AirDNA's 2026 Best Places to Invest report, I thought there was a typo.

Port Arthur, Texas at number one? Akron, Ohio in the top ten?

No Destin. No Vail. No Outer Banks.

But after digging into the numbers, it makes complete sense. And frankly, I wish I'd seen this shift coming sooner.

The New STR Playbook: Why Port Arthur Outperforms Destin

Here's the thing about beach towns and ski resorts — everyone knows they're great for vacation rentals. That's the problem. When everyone knows something, it gets priced in.

A beachfront condo in Destin might pull $80,000 in annual revenue. Sounds amazing, right? But that same property costs you $600,000 or more to acquire. You're looking at a 13% gross yield before expenses, management fees, and the inevitable HVAC replacement because salt air destroys everything.

Now look at Port Arthur. A property pulling $35,000 annually on a $151,000 purchase price. That's a 23% gross yield. The math isn't even close.

Jamie Lane, AirDNA's Chief Economist, put it perfectly: "Just because an area has high revenue potential, that doesn't necessarily mean it's a good investment. We have to look at that in relation to the cost of the home to generate that revenue."

This isn't complicated stuff. But somehow the STR investment community spent years chasing revenue numbers instead of yield percentages. 2026 is the year that changes.

2026's Top 10 Markets: The Data Behind the Unexpected Winners

Let me lay out the full list, because every market on here tells a story:

Notice anything? Not a single traditional vacation destination. Instead, you're looking at state capitals, industrial hubs, military towns, and healthcare centers.

The aggregate stats are what really jumped out at me:

Average home price across top 10: $296,000
Average annual revenue: $40,500
Average yield: ~14%
Common trait: Year-round demand, not seasonal

That last point is huge. These aren't markets where you make all your money in three summer months and pray for a mild winter. You're booking traveling nurses in February the same way you're booking them in July.

The Affordability Equation: Why a $150K Property Beats a $600K Beach House

Let me run through the actual math, because I think a lot of investors skip this step.

Scenario A: Destin Beach Condo

Purchase price: $600,000
Annual revenue: $80,000
Gross yield: 13.3%
Down payment (25%): $150,000
Monthly mortgage (at 6.5%): ~$2,850
Annual debt service: $34,200
Cash flow before expenses: $45,800

Scenario B: Port Arthur House

Purchase price: $151,000
Annual revenue: $35,000
Gross yield: 23.2%
Down payment (25%): $37,750
Monthly mortgage (at 6.5%): ~$715
Annual debt service: $8,580
Cash flow before expenses: $26,420

Now here's where it gets interesting. With the same $150,000 you'd use for one Destin down payment, you could acquire four Port Arthur properties. Four properties generating $26,420 each equals $105,680 in total cash flow before expenses.

That's more than double what the single beach condo produces. And you've diversified across multiple properties instead of having all your eggs in one basket.

The entry barrier matters too. Mortgage rates are finally declining in 2026, but they're still not 2020 levels. A lower purchase price means more investors can actually get into the game.

Deep Dive: How Oil Workers and AI Data Centers Created STR Goldmines

The Port Arthur Story

Port Arthur sits about 90 miles east of Houston on the Gulf Coast. It's home to the largest oil refinery in the United States. It's also known as the "Cajun Capital" and, fun fact, has a Janis Joplin museum.

But here's what matters for STR investors: this town runs on workers who need extended stays. We're not talking about families booking a weekend beach trip. We're talking about refinery contractors, consultants, and oil field workers who need a place to stay for weeks or months at a time.

The numbers back this up:

Occupancy rate: 78%
Listing growth: 23% year-over-year
Median home price: $151,265

That 78% occupancy is remarkable for a market most people have never heard of. And the 23% listing growth tells you other investors are catching on to this opportunity.

There's also a secondary demand driver most people miss — eco-tourism. The marshlands and coastal wetlands attract birders, fishermen, and nature enthusiasts year-round. It's not the primary market, but it fills gaps.

The Abilene Surprise

Abilene at number two might be the most unexpected story on this list. Why? One word: Stargate.

OpenAI's first Stargate data center opened near Abilene, and it completely transformed the local lodging market. According to AirDNA, "hotel occupancies were through the roof" following the announcement and construction.

The numbers:

Occupancy rate: 77%
Listing growth: 15% year-over-year
Average annual revenue: $55,000 (highest on the list)

This is the tech infrastructure buildout play. These data centers require thousands of construction workers, then ongoing technical staff. They need somewhere to stay. And in a town like Abilene, hotels fill up fast.

Here's what I find fascinating — this is a repeatable pattern. Wherever major tech infrastructure gets built, workforce housing demand follows. If you can identify the next data center location before it's announced, you're sitting on a goldmine.

2026 Market Conditions: Why This Is the Best Entry Point Since 2021

I don't say this lightly, but 2026 looks like the best year to invest in STRs since the pandemic boom of 2021. Here's why:

Mortgage rates are finally coming down. This lowers your carrying costs and makes the yield math work better.

The STR Premium is at its highest since 2022. The "STR Premium" measures earnings potential versus investment cost. After compressing in 2023-2024 when everyone and their cousin listed a property, it's expanding again.

Listing growth has slowed dramatically. New STR listings grew at 20% annually in 2021-2022. In 2026, that's dropped to 4.6%. Less competition means better occupancy rates for existing properties.

ADR is trending up. Average Daily Rate (ADR) is expected to rise 1.5% in 2026 and accelerate further in 2027. Revenue per booking is improving.

The supply-demand dynamics have shifted. The gold rush phase is over. The tourists who came back from COVID-era travel haven't left — they just stopped creating as much new competition for you.

Risks and Reality Checks: What Could Go Wrong in Small-City Investing

I'd be doing you a disservice if I didn't talk about the risks here. These markets aren't guaranteed wins.

Regulatory uncertainty. Big cities have established STR regulations. Small cities can change the rules fast, and they often don't have the legal infrastructure to fight back against. One city council vote could shut you down.

Thin markets. Fewer comparable properties means pricing is harder. You might over or underprice your listing for months before you figure out the right number.

Economic concentration. Port Arthur depends heavily on oil and gas. If energy prices crash and refineries cut back, your guest pipeline dries up overnight. Same goes for Abilene — if the data center project stalls, demand disappears.

Management challenges. Good property managers are hard to find in small markets. You might end up self-managing or working with someone who doesn't understand STR best practices.

Exit strategy concerns. Selling an investment property in Port Arthur isn't like selling in Nashville. The buyer pool is smaller, and you may need to hold longer than planned if market conditions change.

None of these are dealbreakers. But you need to go in with eyes open.

Finding Your Own Hidden Gem: A Framework for Identifying Overlooked Markets

So how do you find the next Port Arthur before everyone else discovers it?

Start with these demand drivers:

Workforce travel hubs. Look for areas with hospitals, military bases, state capitals, industrial facilities, and tech buildouts. Traveling nurses alone represent a massive STR guest segment — roughly 1.75 million nurses work travel assignments annually.

Price-to-revenue sweet spots. Target markets where median home prices fall between $150,000-$300,000 and annual STR revenue potential exceeds $30,000. That's roughly where you'll find 14%+ yields.

Year-round demand indicators. Avoid markets where demand craters in off-season months. Look for consistent occupancy throughout the year, driven by business travel rather than vacation timing.

Limited existing supply. Markets with slower listing growth have less competition. Check how many active STRs exist relative to population and demand drivers.

Motivated sellers. Small-city properties often sit on market longer. Days on market data can help you identify sellers who might accept below-asking offers.

When you're analyzing a potential market, cross-reference these factors:

Proximity to major employers (hospitals, bases, industrial facilities)
Current STR occupancy rates (aim for 70%+)
Year-over-year listing growth (lower is better for new entrants)
Median home prices relative to revenue potential
Local STR regulations (or lack thereof)

JustPropertySearch lets you filter by price range, compare rental yield data across markets, and identify properties near the workforce demand drivers I've mentioned. Use it to narrow your search before you start making offers.

The Bottom Line

The 2026 STR landscape looks nothing like 2019. Pandemic travel habits stuck. Workforce travel is a massive demand driver. And the affordability math has shifted decisively toward smaller markets.

Beach towns and ski resorts aren't dead investments — they're just no longer the obvious play. The smart money is looking at oil towns, state capitals, healthcare hubs, and AI infrastructure buildouts.

Port Arthur. Abilene. Akron. These aren't sexy destinations. But sexy doesn't pay your mortgage. Yield does.

If you're serious about STR investing in 2026, stop chasing the markets everyone already knows about. Start running the numbers on the places everyone's overlooking.

The data is clear. The opportunity is there. The question is whether you'll act on it.