Short-Term vs. Long-Term Rentals: Summer 2025 Market Analysis

Introduction

As the real estate market evolves, investors and property owners face the critical decision of choosing between short-term rentals (STRs) and long-term rentals (LTRs). Summer 2025 presents unique challenges and opportunities in both sectors. This analysis delves into current trends, profitability, regulatory landscapes, and market dynamics to help you determine the optimal rental strategy for your investment goals.

Short-Term Rentals: High Returns Amidst Regulatory Challenges

Profitability and Demand

Short-term rentals have historically offered higher per-night rates, especially in tourist-heavy areas. In summer 2025, destinations like Myrtle Beach, SC, continue to see strong occupancy rates, with a 2% increase highlighting growing appeal.

However, the STR market is experiencing a slowdown, with supply growth projected to decelerate further in 2025 before stabilizing in 2026.

Regulatory Landscape

Cities worldwide are tightening regulations on STRs. For instance, New York City has intensified enforcement of its short-term rental regulations under Local Law 18, leading to a dramatic 90% drop in Airbnb listings since the law’s implementation.

Similarly, Highland councillors in Scotland are proposing the introduction of a short-term let control zone across the entire Highlands region to address a severe shortage of affordable housing for locals.

Operational Considerations

Managing STRs requires significant effort, including frequent cleaning, guest communication, and dynamic pricing strategies. Additionally, insurance premiums for STRs are typically higher, averaging $2,000–$3,000 annually, due to increased liability risks.

Long-Term Rentals: Stability and Growing Demand

Consistent Income and Lower Turnover

LTRs offer predictable monthly income with lower tenant turnover. In 2025, the demand for single-family rentals is rising, fueled by tenant preferences and investor interest. With 31% of renters living in SFRs and rent prices up 4.4% year-over-year, investors are responding—67% of landlords own SFRs, and 32% plan to expand in 2025.

Financing and Insurance Advantages

LTRs are generally more favorable for financing, as lenders view them as lower-risk investments due to consistent income streams. Insurance costs are also lower, focusing primarily on property damage and tenant liability.

Market Trends

As homeownership becomes more financially out of reach, particularly due to the pandemic-induced housing boom and persistently high mortgage rates, suburban areas are increasingly turning into renter hotspots. A new report from Point2Homes shows renter households growing faster in suburbs than in their adjacent metro cities.

Comparative Analysis: Short-Term vs. Long-Term Rentals

FAQs

Conclusion

In summer 2025, both STRs and LTRs present unique opportunities and challenges. STRs can yield higher returns but come with increased regulatory scrutiny and management demands. LTRs offer stability and consistent income, appealing to investors seeking lower risk. Carefully assess your investment objectives, market conditions, and regulatory environments to choose the strategy that aligns best with your goals.

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