Short‑term rentals (STRs) continue to evolve across the U.S., and Connecticut is no exception. As travelers seek coastal escapes, historic towns, and proximity to major urban hubs, certain Connecticut markets stand out for their rental demand, pricing power, and investment potential. Below, we detail five of the top STR markets in Connecticut as of 2025—why they shine, what metrics support them, and what to watch out for.
How We Selected These Markets
To identify the top markets, we focused on several key criteria:
Average Daily Rate (ADR) and occupancy — ability to gather premium rates and maintain bookings
Gross revenue potential — revenue relative to property value
Regulatory environment — permitting, zoning, short‑term rental licensing risk
Tourism / guest appeal — access to beaches, historic districts, nature, coastal attractions
Barriers to entry / property cost vs upside — how capital requirement balances with returns
1. Milford, CT — Best All‑Around Coastal Market
Why it stands out
Milford combines a coastal lifestyle with commuter access and a diversified demand base. It checks many of the boxes for STR investors: scenic shoreline, beach appeal, events, and a location that draws from both regional and metro markets.
Key Metrics
Occupancy: ~62 %
ADR: ~$304/night
Average gross revenue: ~$55,700/year
Supply growth: ~21 % year-over-year (rental listings)
Strengths & Opportunity
Balanced performance: It may not always top every metric (like ADR or occupancy), but it offers a balanced combination of rate, demand, and revenue that tends to produce steadier returns.
Coastal draw: Beaches, parks, boardwalk, and coastal charm ensure strong summer demand.
Shoulder season resilience: Not totally dependent on summer — proximity to urban areas helps draw weekenders and escapes.
Investor interest: The market’s rising supply is proof that more investors see its potential—but supply hasn’t yet overwhelmed demand.
Risks & Watch Points
High entry cost: Coastal properties command premiums, which can blunt yield unless you negotiate well.
Seasonality: Winter and off‑peak months tend to see lower bookings; cash reserves are crucial.
Regulation risk: As towns tighten STR permitting or lodging taxes, Milford may face new constraints in the coming years.
2. Stonington, CT / Southeastern Region — High ADR Coastal Appeal
Why it stands out
In the southeastern Connecticut region, Stonington often leads in ADR and revenue potential. It is part of a broader coastal market that includes Groton, East Lyme, and New London, all of which are benefiting from maritime tourism and coastal charm.
Key Metrics & Highlights
Stonington’s ADR: ~$334.53
Occupancy: ~45.5 %
Ranks #1 in Southeastern CT STR region
Nearby markets: Groton, East Lyme, New London also show strong metrics (ADRs in $340–$365 range)
Strengths & Opportunity
Premium pricing: The beauty of coastal rentals allows for higher nightly rates.
Tourism draw: Proximity to attractions, beaches, marinas, and New England seaside charm make it appealing to vacationers.
Limited supply relative to demand: Although more investors are entering, the popularity of the area still gives room for supply/demand imbalance.
Spillover potential: Watch neighboring towns which may become secondary STR nodes as investors push outward.
Risks
High operational costs: Coastal properties face weather exposure, maintenance, insurance premiums, and potential flood risk.
Regulation or zoning: Some municipalities may impose stricter rules on STR licensing or limit tourist density.
Seasonal amplitude: Demand may cluster in summer months; winter and off-season demand is weaker.
3. New Haven / South Central Region
Why it stands out
New Haven anchors the South Central Connecticut STR market and offers a mix of academic tourism (Yale), cultural attractions, healthcare demand, and local travel. It serves both leisure and weekday visitors, which can drive demand.
Key Metrics
In the South Central region, New Haven ranks #1 by monthly revenue among STR markets. ADR ~ $160, occupancy ~46 %
In Summer, New Haven’s occupancy sits in the upper range (≈ 64 %) with ADRs near $210 in certain classes.
Growth in active rentals year-over-year is high, indicating momentum.
Strengths & Opportunity
Event / institutional anchor: Yale, museums, arts festivals, performances drive a steady visitor flow.
Mixed demand: Not solely leisure — business, academic, health, family visitors provide diversity.
Moderate cost of entry: Compared to coastal luxury zones, New Haven offers more mid‑tier pricing that can still yield solid returns.
Improving infrastructure & amenities: Ongoing revitalization, food scene, walkability add to guest appeal.
Risks
Competition & supply saturation: With many investors eyeing New Haven, differentiation is critical (amenities, experience, listing quality).
Regulation: City or county permitting, tax collection, and licensing may tighten as more listings appear.
Neighborhood variability: Some areas are far more desirable vs borderline; choose blocks carefully.
4. Stamford / Fairfield County / Commute Belt — High Occupancy, Strong ADRs
Why it stands out
Stamford regularly appears at the top of Connecticut’s STR rankings thanks to its commuter infrastructure, proximity to NYC, and corporate/tour business demand. Stamford is the #1 urban Connecticut Airbnb market.
Key Metrics
Stamford often outpaces many CT markets for income potential.
In STR rankings, Stamford leads in occupancy (~70 %) with ADR in the ~$214 range, generating robust revenue.
Strengths & Opportunity
Strong weekday demand: Business travelers, commuting stays, corporate assignments boost occupancy outside “vacation” windows.
Higher baseline pricing: Because of demand and location premium, you can command higher daily rates.
Less seasonality pressure: Compared to beach towns, Stamford’s demand is more balanced year-round.
Access & amenities: Good transportation, restaurants, urban conveniences that guests expect.
Risks
Very high property cost / entry barrier: Stamford’s real estate prices are among the highest in CT, which compresses yield unless you've negotiated well.
Regulatory scrutiny: Fairfield County towns often impose stricter zoning, transient occupancy limits, and lodging taxes.
Competition & expectations: Guests expect high standards—luxury finishes, professional management, strong reviews.
5. Woodstock (Northeastern CT) — A Hidden Gem
Why it stands out
Although it's less talked about, Woodstock in northeastern Connecticut ranks as the #1 STR market in the Northeastern CT planning region. The market is small but offers high ADR potential and escape appeal.
Key Metrics
ADR in Woodstock: ~$350.28/night
Occupancy: ~42 %
Strengths & Opportunity
Escape appeal: Wooded landscapes, rural retreats, fall foliage, outdoor recreation attract visitors seeking a break from urban chaos.
Lower entry cost relative to coastal markets: Properties are often more affordable, making achievable entry for smaller investors.
Less regulatory pressure: Rural towns may have fewer STR restrictions, but always check local zoning.
Niche advantage: Guests seeking quiet, picturesque stays will pay premium for well-positioned homes.
Risks
Seasonality & lower occupancy: Off-peak periods may see thinner bookings.
Smaller guest base: Less foot traffic, fewer events, fewer attractions, so marketing is critical.
Amenities & infrastructure: Guests expect high-quality furnishings, strong Wi-Fi, and comforts—even in the country.
Logistics: Service providers (cleaning, maintenance) may be harder to access in rural settings.
Honorable Mentions & Rising Markets
Norwich, CT: Ranks high in state‑wide STR listings, with ADR ~$233 and moderate occupancy.
Norwalk, CT: Strong ADR (~$275) and a desirable coastal / urban combination.
Greenwich, CT: Premium beach location with high ADRs (~$380) though with steep costs.
Milford, Branford, Guilford (in South-Central region): Also top markets in that planning region (Milford #2, Branford #4, Guilford #5) for STRs.
These may be worth monitoring depending on your capital, risk appetite, and geographic preference.
Tips for Making STRs Work in CT in 2025
To turn the promise of these markets into real success, here are a few of our practical tips:
Know municipal regulations before investing
The state of Connecticut granted towns power to regulate STRs (licenses, zoning) as of late 2024. Always check local ordinances, permit requirements, maximum allowed days, and lodging taxes.Underwrite conservatively
Use mid-tier ADRs, assume lower occupancy, and budget for off‑season. Don’t rely on perfect summer bookings to cover your entire year.Focus on experience & reviews
In competitive markets, guest reviews, amenities, cleanliness, communication, and presentation can make or break performance.Build operational resilience
For rural markets, have reliable cleaning, maintenance, and emergency contacts. In coastal towns, double-check weather readiness and insurance.Diversify across markets or property types
Don’t bet everything on one town. If you can, spread your capital among stable and high‑ADR markets.Model exit and conversion flexibility
Consider whether you can transition the property to full-time rental if STRs become restricted.Stay tuned to lodging taxes and tax strategy
Collect and remit applicable state and municipal taxes. Work with a CPA familiar with STR depreciation, cost segregation, and pass-through entity planning.Use data tools and local insights
Platforms like AirROI, SummerOS, and local real estate brokers help you model expected performance. Combine that with boots-on-the-ground knowledge.
Each region would make a fantastic investment, however each has trade-offs: capital requirement, regulation risk, seasonality, or operational complexity. The key is to match a market to your budget, risk tolerance, and capability for management to insure profitable ownership.
