Traverse City draws 3 million annual visitors with peak-season occupancy hitting 76.6%, but a near-doubling of supply since 2021 has compressed year-round returns.
Market Overview
Traverse City sits on Grand Traverse Bay and pulls roughly 3 million visitors per year into a city of 15,707 permanent residents. The short-term rental market has grown substantially over the past five years. Active listings stood at 375 in 2021 and reached 748 by February 2026, a 99% increase in supply. That supply growth is the defining story of the current market.
As of February 2026, the market carries 748 active listings with an average daily rate of $261.70 and a 28% occupancy rate. February is the lowest-demand month of the year, so these figures reflect the seasonal trough. On an annual basis (2025 full year), average occupancy was 44.1% and average daily rate was $282, producing average monthly revenue of $4,079 per listing.
The market is distinctly seasonal. July 2024 data shows average occupancy reaching 76.6% and average ADR of $366, with mean monthly revenue of $9,315. Revenue in the summer peak is roughly five times what a typical property earns in February. Investors evaluating this market need to underwrite both the peak and the off-season carefully, since weak winter months significantly drag the annual average.
The competitive landscape has shifted. The near-doubling of supply since 2021 has pushed average occupancy from 66.2% in 2021 down to 44.1% in 2025. ADR did recover from a 2022 low of $230 to $282 in 2025, which partially offsets the occupancy decline, but average annual revenue per listing ($4,079 in 2025) remains well below the 2021 peak of $6,034. New entrants are entering a more saturated market than existed three years ago.
Seasonal Patterns
| Month | Occupancy | ADR | Revenue | Active Listings |
|---|---|---|---|---|
| Jan | 33% | $211 | $1,998 | 566 |
| Feb | 36% | $185 | $1,749 | 567 |
| Mar | 45% | $175 | $2,752 | 475 |
| Apr | 45% | $188 | $2,897 | 485 |
| May | 53% | $246 | $4,066 | 478 |
| Jun | 66% | $311 | $6,354 | 527 |
| Jul | 77% | $366 | $9,315 | 583 |
| Aug | 73% | $341 | $7,953 | 581 |
| Sep | 62% | $277 | $5,136 | 578 |
| Oct | 56% | $253 | $4,321 | 559 |
| Nov | 41% | $211 | $2,610 | 557 |
| Dec | 35% | $219 | $2,290 | 565 |
Traverse City operates on one of the more pronounced seasonal cycles in the Midwest STR market. The data covers five full years and shows consistent patterns.
Peak season runs June through September. July is the strongest month with average occupancy of 76.6% and average ADR of $366, generating mean monthly revenue of $9,315. August follows at 72.6% occupancy, $341 ADR, and $7,953 average revenue. June comes in at 66.4% occupancy, $311 ADR, and $6,354 average revenue. September holds reasonably well at 61.6% occupancy and $277 ADR, with $5,136 average revenue.
The shoulder seasons (spring and fall) show usable but not strong demand. May reaches 53.2% occupancy at $246 ADR, averaging $4,066. October holds at 56.2% occupancy and $253 ADR, averaging $4,321. April and March both sit at 44.6% occupancy with ADRs of $188 and $175 respectively.
The winter trough is deep. January averages 33% occupancy at $211 ADR. February drops to 35.6% occupancy but only $185 ADR. December is 34.6% occupancy at $219 ADR. November is the softest month at 41.2% occupancy and $211 ADR.
The practical implication for operators: the four peak months (June to September) need to carry the property financially. Minimum-stay requirements and dynamic pricing during peak weekends are standard practice in this market. Operators who accept shorter stays in the shoulder and winter to keep calendars fuller often do better than those holding for peak-equivalent rates year-round.
Revenue Breakdown
| Metric | 25th Pctile | Median | 75th Pctile | 90th Pctile |
|---|---|---|---|---|
| Revenue/mo | $737 | $1,415 | $2,546 | $3,631 |
| ADR | $154 | $216 | $299 | $445 |
| Occupancy | 11% | 25% | 38% | 57% |
Revenue in the Traverse City market varies widely depending on the property and the month. The February 2026 snapshot, representing the seasonal low, shows an average revenue of $1,848 per listing. The median (50th percentile) was $1,414.70, meaning half of all active listings earned less than that amount in the slowest month of the year.
The percentile breakdown for February 2026: 25th percentile earned $737.30, median earned $1,414.70, 75th percentile earned $2,545.90, and the 90th percentile earned $3,630.50. The gap between the bottom and top quartile is more than 3.4x, which reflects real differences in property type, location, amenities, and management quality rather than random variation.
On an annualized basis using 2025 full-year averages, mean monthly revenue was $4,079. Properties at the 75th percentile in peak months (July average revenue: $9,315 mean) can generate $70,000 or more annually if performance holds across the summer. Bottom-quartile properties in a market with 28% to 35% occupancy in winter months may generate $25,000 to $35,000 annually before expenses.
Investors should model conservatively using the 50th percentile figures, not the market average, since the average is pulled up by a relatively small number of high-performing premium properties.
Investment Analysis
Revenue Trend
RevPAR & ADR Trend
| Date | Revenue | RevPAR | ADR |
|---|---|---|---|
| Mar 2021 | $5,460 | $176 | $217 |
| Apr 2021 | $5,189 | $173 | $224 |
| May 2021 | $5,771 | $186 | $237 |
| Jun 2021 | $7,226 | $241 | $282 |
| Jul 2021 | $9,357 | $302 | $322 |
| Aug 2021 | $8,825 | $285 | $313 |
| Sep 2021 | $6,251 | $208 | $275 |
| Oct 2021 | $5,539 | $179 | $259 |
| Nov 2021 | $3,615 | $121 | $215 |
| Dec 2021 | $3,106 | $100 | $212 |
| Jan 2022 | $2,348 | $76 | $177 |
| Feb 2022 | $2,413 | $86 | $180 |
| Mar 2022 | $2,806 | $91 | $171 |
| Apr 2022 | $3,017 | $101 | $193 |
| May 2022 | $4,535 | $146 | $247 |
| Jun 2022 | $6,686 | $223 | $287 |
| Jul 2022 | $9,818 | $317 | $358 |
| Aug 2022 | $7,688 | $248 | $313 |
| Sep 2022 | $5,343 | $178 | $255 |
| Oct 2022 | $4,355 | $141 | $225 |
| Nov 2022 | $2,606 | $87 | $179 |
| Dec 2022 | $2,137 | $69 | $172 |
| Jan 2023 | $1,776 | $57 | $155 |
| Feb 2023 | $1,658 | $59 | $144 |
| Mar 2023 | $1,957 | $63 | $150 |
| Apr 2023 | $2,111 | $70 | $157 |
| May 2023 | $3,445 | $111 | $207 |
| Jun 2023 | $5,782 | $193 | $259 |
| Jul 2023 | $9,171 | $296 | $340 |
| Aug 2023 | $7,348 | $237 | $309 |
| Sep 2023 | $4,759 | $159 | $240 |
| Oct 2023 | $3,393 | $109 | $211 |
| Nov 2023 | $2,116 | $71 | $198 |
| Dec 2023 | $2,027 | $65 | $240 |
| Jan 2024 | $2,230 | $72 | $272 |
| Feb 2024 | $1,302 | $45 | $155 |
| Mar 2024 | $1,605 | $52 | $160 |
| Apr 2024 | $2,031 | $68 | $182 |
| May 2024 | $3,082 | $99 | $249 |
| Jun 2024 | $5,716 | $191 | $337 |
| Jul 2024 | $8,387 | $271 | $384 |
| Aug 2024 | $7,879 | $254 | $372 |
| Sep 2024 | $4,663 | $155 | $299 |
| Oct 2024 | $3,931 | $127 | $260 |
| Nov 2024 | $2,125 | $71 | $205 |
| Dec 2024 | $1,782 | $58 | $201 |
| Jan 2025 | $1,584 | $51 | $183 |
| Feb 2025 | $1,524 | $54 | $184 |
| Mar 2025 | $1,933 | $62 | $177 |
| Apr 2025 | $2,139 | $71 | $185 |
| May 2025 | $3,500 | $113 | $290 |
| Jun 2025 | $6,360 | $212 | $391 |
| Jul 2025 | $9,840 | $317 | $429 |
| Aug 2025 | $8,023 | $259 | $398 |
| Sep 2025 | $4,664 | $156 | $317 |
| Oct 2025 | $4,387 | $142 | $308 |
| Nov 2025 | $2,590 | $86 | $255 |
| Dec 2025 | $2,400 | $77 | $272 |
| Jan 2026 | $2,053 | $66 | $265 |
| Feb 2026 | $1,848 | $66 | $262 |
Occupancy vs Supply
| Date | Occupancy | Active Listings |
|---|---|---|
| Mar 2021 | 62% | 299 |
| Jun 2021 | 77% | 380 |
| Sep 2021 | 72% | 394 |
| Dec 2021 | 47% | 394 |
| Mar 2022 | 48% | 393 |
| Jun 2022 | 70% | 553 |
| Sep 2022 | 67% | 549 |
| Dec 2022 | 36% | 539 |
| Mar 2023 | 43% | 533 |
| Jun 2023 | 72% | 540 |
| Sep 2023 | 67% | 536 |
| Dec 2023 | 30% | 485 |
| Mar 2024 | 35% | 472 |
| Jun 2024 | 58% | 418 |
| Sep 2024 | 53% | 659 |
| Dec 2024 | 31% | 668 |
| Mar 2025 | 35% | 680 |
| Jun 2025 | 55% | 743 |
| Sep 2025 | 49% | 754 |
| Dec 2025 | 29% | 740 |
Entry prices in Traverse City are meaningful. The typical home value is $424,590 and the median recent sale price was $406,333. With 336 homes currently for sale and a median 44 days to pending, the market is not distressed but also not moving at a frantic pace. The sale-to-list ratio of 0.974 indicates modest negotiating room.
At a $400,000 purchase price with a 25% down payment ($100,000), a buyer takes on a $300,000 mortgage. At current rates near 7%, that is roughly $2,000 per month in principal and interest before taxes, insurance, HOA, and property management. The 2025 market average monthly revenue was $4,079, which leaves a slim margin after all expenses. Properties performing at the 75th percentile averaged $2,545.90 per month in February (a soft month), and the 2025 annual average for that cohort would be materially higher during peak months.
The revenue spread is significant. The 25th percentile earns $737.30 per month in February versus $3,630.50 for the 90th percentile in the same period. Annually, top-quartile properties generate income that can cover debt service with room to spare, while bottom-quartile properties may not cover operating costs alone during winter months.
Key risk factors: (1) supply continues to grow, with listings up from 558 in 2024 to 748 in early 2026; (2) occupancy compression is ongoing and shows no sign of reversing; (3) heavy revenue concentration in June through September means a bad summer (weather events, regional competition) disproportionately impacts annual returns; (4) regulatory requirements add compliance cost and operational friction. Investors who can acquire below the median price point or who identify properties with differentiated appeal (waterfront, ski proximity, premium amenities) are better positioned than those buying average product at average prices.
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| Date | Typical Home Value |
|---|---|
| Mar 2021 | $314,364 |
| Dec 2021 | $352,091 |
| Sep 2022 | $384,764 |
| Jun 2023 | $401,048 |
| Mar 2024 | $426,012 |
| Dec 2024 | $434,621 |
| Dec 2025 | $440,442 |
Booking Insights
As of February 2026, the average booking lead time in the Traverse City market is 35.5 days, with a median of 23 days. That median-to-average gap indicates a segment of planners booking 60 or more days out, pulling the average up, while the bulk of bookings come in within three to four weeks of arrival.
Average length of stay is 6 days, with a median of 2 days. The same gap pattern applies: a portion of guests book multi-week stays (common in peak summer for families renting cottages or lakefront properties), but the typical booking is a short weekend or two-night stay.
For operators, this has two practical implications. First, holding availability open for last-minute bookings is not a strong strategy in winter months when demand is thin. Dynamic pricing tools that lower rates as the arrival date approaches help fill gaps without leaving rooms empty. Second, the 6-day average length of stay in aggregate likely reflects the summer skew, when longer vacations are common. In shoulder and off-season months, shorter minimum stays (2 nights versus 4 or 5) are generally necessary to maintain occupancy.
The 35.5-day average lead time means that peak-summer weekends are frequently booked 5 to 8 weeks in advance by the planners who set market rates. Pricing those dates aggressively early is more important than discounting to fill them late.
Short-Term Rental Regulations
Traverse City requires property owners to obtain a short-term rental license before listing a property. The licensing process involves an application with the city, proof of compliance with local zoning requirements, and a property inspection to confirm safety standards are met. Zoning restrictions apply, and not all residential zones permit short-term rentals, so buyers must verify zoning eligibility for a specific parcel before purchasing with STR intent.
The city collects a lodging tax on short-term rental revenue. Operators are responsible for collecting this tax from guests and remitting it to the city on the required schedule. Platforms like Airbnb and Vrbo remit state-level taxes automatically in Michigan, but local lodging taxes may require separate remittance by the operator depending on the arrangement. Confirming the current tax collection and remittance requirement with the city directly or with a local attorney is advisable before listing.
Michigan also levies a 6% state use tax on short-term rental revenue. Some municipalities in Grand Traverse County have their own additional assessments. The total tax burden on gross rental revenue can reach 10% or more depending on applicable local levies.
Regulations in resort markets like Traverse City tend to evolve as community sentiment about short-term rentals shifts. Operators should monitor city council proceedings for any proposed changes to licensing caps, zoning overlays, or density restrictions. The data shows listing count grew from 375 in 2021 to 748 in early 2026, and markets with that pace of growth often attract regulatory attention. Treating compliance as an ongoing responsibility rather than a one-time license check is the appropriate posture.
Market Comparison
Comparing Traverse City to the broader U.S. STR market puts its performance in context. The U.S. national average STR occupancy in 2024 ran approximately 50 to 55% on an annual basis. Traverse City’s 2025 average of 44.1% trails that benchmark, reflecting the severity of its seasonal trough. However, Traverse City’s peak-month occupancy (76.6% in July) compares favorably to many inland markets and is competitive with other Great Lakes resort destinations.
The 2025 average daily rate of $282 is above the national average for non-urban STR markets, which typically runs $200 to $240. Traverse City commands a meaningful rate premium, driven by its positioning as a destination for wine tourism, water access, and proximity to Sleeping Bear Dunes National Lakeshore.
The supply growth rate is the metric that stands out negatively. Active listings nearly doubled from 375 to 748 between 2021 and early 2026. Markets with that pace of supply expansion typically see sustained occupancy pressure. Many comparable resort markets (northern Wisconsin lakes, upper Michigan peninsulas, Catskills) have seen similar patterns post-2021 as remote-capable buyers purchased vacation properties with STR intent.
For investors comparing Traverse City to alternatives, the market offers a real demand base and premium ADR, but the current supply trajectory requires careful underwriting. Properties with water access or proximity to the Dunes perform above market; standard inland properties in average condition face the full force of the competitive supply increase.
Frequently Asked Questions About Traverse City, Michigan
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