In a market where margins matter and competition is fierce, not all short-term rentals (STRs) are created equal. Recent data shows that larger homes are pulling ahead not just in revenue, but in efficiency and overall investability. And the numbers back it up.
To understand where the best opportunities lie, we looked beyond surface-level metrics and focused on what really drives performance: the difference between how fast demand is growing versus how fast supply is growing. This metric known as the demand-supply growth differential—tells us whether a market (or segment) is tightening or loosening, which directly impacts pricing power, occupancy, and ultimately profitability.
We analyzed the trailing 12- and 24-month averages of this differential in several key STR markets and home types. Coupled with ADR (average daily rate), RevPAR (revenue per available room), and macro trends in operational efficiency, a clear picture emerged.
Nationwide Trends: Bigger Homes, Bigger Payoffs
When comparing 4+ bedroom, 3+ bathroom homes to smaller homes (3 bedrooms or less) nationwide, a pattern stood out:
| Segment | Trailing 12-Mo. Differential | ADR | RevPAR |
| Large Homes | +2.77% | $707 | $479 |
| Small Homes | +1.43% | $249 | $162 |
The differential between demand and supply growth is nearly double for large homes, even if the absolute number feels modest. But the real kicker is in the ADR and RevPAR both of which are more than 2x higher in larger properties. This isn’t just a revenue story it’s a margin story.
Larger homes don’t just earn more they cost less per square foot to operate. Cleaning, utilities, and basic maintenance often scale more efficiently in big homes, meaning your OPEX per night shrinks while your revenue per night grows.
For investors, this creates a clear advantage: higher gross revenue, stronger pricing power, and better unit economics.
Market Comparisons: How Local Trends Stack Up
To illustrate how this plays out on the ground, we looked at three distinct markets: Scottsdale, St. Louis, and Henderson. Each tells a unique story.
Scottsdale, AZ – A Competitive and Saturated Market
Scottsdale remains one of the most popular STR markets in the country, with high visibility and international appeal. But with maturity comes competition.
- Trailing 12-month differential: +2.43%
- Trailing 24-month differential: +2.20%
The demand is still edging out supply, but not by much. ADR has softened and RevPAR has dipped, indicating that operators are likely facing price compression. It’s still a strong market but only for top-tier, differentiated properties.
St. Louis, MO – Undersupplied and Surging
St. Louis, once considered a regional play, is now emerging as a high-upside growth market.
- Trailing 12-month differential: +11.45%
- Trailing 24-month differential: +4.67%
This is one of the strongest differentials we’ve seen, and it’s backed by rising ADR, RevPAR, and occupancy. Demand is clearly outpacing supply by a wide margin. This makes St. Louis a prime candidate for new inventory especially larger, well-amenitized homes that can take advantage of the pricing power this imbalance creates.
Henderson, NV – Regulatory Complexity with Mixed Returns
Henderson’s STR performance reflects a highly nuanced, regulated environment. Licensing restrictions create artificial caps on supply, which can both protect incumbents and stifle growth.
- Trailing 12-month differential: -2.57%
- Trailing 24-month differential: +1.46%
While demand is healthy, the inconsistency in supply and growth trends makes Henderson more suitable for experienced, locally savvy operators. It’s not a beginner’s market, and it doesn’t offer the same expansion runway that others do.
The Bottom Line: Bigger STRs Are the Smarter Bet
When demand grows faster than supply, you get tailwinds. When your RevPAR is more than double that of competing property types, you have leverage. And when your OPEX per square foot decreases as your home size increases, you gain real efficiency.
Large STRs especially in emerging or tightening markets represent the smartest investment path right now. The data shows it. The economics support it. And the trendline is clear.
