July 8, 2026
Samuel Foote | REALTOR® DRE# 02081916
Over the past several years, San Diego's short-term rental market has changed dramatically. The introduction of licensing requirements, higher interest rates, record home prices, and increased competition have left many investors asking the same question: Is San Diego still a good place to own an Airbnb under the city's Short-Term Residential Occupancy (STRO) program?
As both an owner and self-manager of several Airbnb properties in San Diego, I've experienced those changes firsthand. While the market isn't what it was five years ago, the opportunity is still there. So, does it still make sense to buy a vacation rental in San Diego?
In my opinion, yes. But the path to success looks different today than it did a few years ago.
Vacation Rental Demand Remains Strong
Demand is naturally one of the driving forces behind any hospitality business. It's one of the primary reasons San Diego continues to be an attractive market for short-term rental investors. According to the San Diego Tourism Marketing District, in 2025 we ranked fourth in the country for hotel occupancy, behind only Oahu, New York City, and Miami. San Diego welcomed approximately 32.8 million visitors in 2025, with that number expected to climb again in 2026. At the same time, active short-term rental supply has declined by roughly 7.8% year over year, creating a healthier balance between supply and demand. Perhaps the biggest advantage is that San Diego remains a year-round destination.
Unlike ski towns or destinations that rely on a short peak season, San Diego benefits from a mild climate that attracts visitors throughout the year. Whether someone is visiting for the beaches, a convention, the new Gaylord Pacific Resort, Balboa Park, SeaWorld, or simply escaping colder weather, there is a steady stream of travelers well beyond the summer months.
Fueling that demand is San Diego's diverse mix of visitors. Most people think Airbnb guests are only beachgoers or vacationers. In reality, common guests include families visiting college students, convention attendees, wedding guests, international tourists, digital nomads, and many more. Just as importantly, San Diego offers enough variety that visitors return again and again for entirely different experiences.
Whether you're into surfing, beaches, and jet skiing or would rather catch a Padres game, explore Balboa Park, enjoy one of our Michelin-recognized restaurants, or spend an evening in Little Italy, there's something for every type of traveler.
Many visitors stay in one neighborhood but spend time throughout the county. Around here, you'll often hear people say, "Everything is about 15 minutes away." While that's not always true, San Diego is remarkably easy to navigate. A visitor can stay in Mission Beach for the boardwalk and surf, spend a day at SeaWorld, then head to the Safari Park in Escondido the next day.
So yes- there is demand. But demand alone doesn't guarantee a successful investment. Today's market rewards owners who understand the numbers and know how to position their property against the competition.
How to Position Your Airbnb for Success
If there's one lesson I've learned over the years, it's this: Amenitize. Amenitize. Amenitize. Say it three times until you remember it.
Strong demand is only one piece of the equation. Several years ago, many properties performed well simply because there were fewer vacation rentals and guest expectations were lower. Today, travelers have countless options and compare everything from design and amenities to reviews and response times- before deciding where to stay.
Choosing the right property has become more important than ever. Location, walkability, parking, outdoor space, property layout, and access to public transit can all have a meaningful impact on long-term performance. Two homes with similar purchase prices can produce very different returns depending on these factors.
Simple upgrades like a hot tub, fire pit, outdoor dining area, beach equipment, bikes, or a thoughtfully designed game room can help a property stand out in search results while increasing both occupancy and average nightly rates.
In short, investors should always ask themselves one question: "Why should someone book my property instead of the twenty others they're looking at?"
It Isn't Just About Revenue-It's About the Numbers
Revenue is exciting- but profit is what matters. A property generating impressive booking numbers can still fall short as an investment if operating expenses weren't carefully considered before the purchase.
Beyond the mortgage, owners need to budget for cleaning, utilities, maintenance, insurance, licensing fees, supplies, platform fees, and ongoing updates to keep the property competitive.
Just as importantly, the purchase price and financing terms have a major influence on long-term performance. Two nearly identical homes can produce very different returns if one was purchased at a lower price or financed under more favorable terms.
That's why evaluating an Airbnb investment goes beyond estimating potential revenue. It requires understanding operating costs, local regulations, financing options, and how those pieces work together to determine whether the investment aligns with your financial goals.
The best Airbnb investment isn't necessarily the property with the highest projected income - it's the one with the strongest long-term financial fundamentals.
One More Thing Before You Buy
One final piece of the puzzle is understanding San Diego's Short-Term Residential Occupancy (STRO) regulations. Licensing, local rules, and property eligibility should all be evaluated before making an offer. A property may look like a great Airbnb investment on paper, but factors such as licensing availability, HOA restrictions, or the property's intended use can significantly impact whether it meets your investment goals.
Fortunately, all of these factors can be researched before you buy, helping you avoid costly surprises after closing.
Is San Diego Still Worth Investing In?
Absolutely—but only with the right property and the right approach. Today's successful investors don't rely on luck. They buy the right property, understand their numbers, comply with local regulations, and create an experience guests genuinely want to book. The demand is there, the city remains one of California's premier travel destinations, and well-positioned properties can still perform well.
Final Thoughts
Every investment property tells a different story. Some look great on paper but disappoint after expenses are factored in, while others outperform because of their location, layout, or guest appeal. That's why careful analysis before you buy is so important.
If you're considering purchasing, selling, or evaluating a short-term rental in San Diego, we'd be happy to help you understand the numbers and determine whether a property truly aligns with your investment goals.
One question I hear all the time is, "If San Diego's Airbnb market is still so strong, why are there still hundreds of available STRO licenses?" It's a fair question. In our next article, we'll break down how San Diego's licensing system works, why licenses are still available, and what every investor should understand before purchasing a short-term rental.
