Buying a home? U.S. home prices are rising and mortgage affordability may affect future quality of life.

Renting an apartment? It doesn't feel like home and there is no sense of security.

So, is it better to buy or rent?

A house is often seen as part of the American dream, but in large metropolitan areas, high housing prices can scare many people away. And the increasing cost of rent makes it difficult for many families to afford living in a big city.

Nationwide, buying a home with a mortgage is more affordable than renting, according to a new report from the Urban Institute. According to the research institute, middle-income households spend 28 percent of their income to pay for a 3-bedroom apartment.

By comparison, if you spend 25 percent of your income on monthly mortgage payments for 30 consecutive years, you could buy a house in the same class with a 3.97 percent down payment and a fixed interest rate of 3.5 percent. With a 20% down payment, you would only have to pay 22% of your income each month.

However, the balance formula between renting and buying may vary widely across the country. As interest rates rise, affordability issues are becoming more prominent in more cities.

In a new study, it was found that renting is more affordable than buying in 16 of the 33 largest metropolitan areas in the United States.

The study looked at housing affordability in metropolitan areas and calculated the difference between the cost of buying and renting a home.

At the top of the list was the San Francisco area. In San Francisco, a middle-income household would spend 80 percent of its income on paying the area's monthly mortgage.

Renting, on the other hand, requires only 37 percent of household expenses. In other words, the cost difference between buying and renting is 43% of income.

In any case, whether to buy or rent varies from person to person. It involves many factors, including home price, rent, home maintenance cost, down payment ratio and loan interest rate, return on capital investment, inflation rate, etc., according to American Excellence Information.

The most basic of these is the home price and rent, which is often referred to as the sale to rent ratio.

About the ratio of sale to rent

It is generally accepted that:

• Rent ratio below 10:Good time to buy a house.

• Between 10 and 20: Depending on the area and my financial situation.

• If the rent ratio is greater than 20, it is time to consider renting.

The argument for buying prevails overwhelmingly when the net cost of providing for a property is lower than the net cost of renting, such as in Chicago, Dallas, St. Louis and most of the central United States.

In most of the Northeast, Florida, California, etc., buying a home is more expensive than renting, where tax benefits are included. Homeowners are only in a favorable position if very expensive home prices rise significantly.

Reasons to buy a home

Many Americans see buying a home as an essential step to a successful life, and there are many financial benefits to owning a home, the most obvious being that property can appreciate significantly. nAR data shows that from 1993 to 2013, the median price of a single family home in the United States increased by 81%.

As has been the case recently, the potential rewards of owning a property come to the forefront in the minds of homebuyers when home prices are rising rapidly. Many homeowners are able to use their mortgage payments to offset their personal income taxes during the repayment period.

Homeowners don't have to worry about rising rents. As they get older, they can enjoy another benefit. If a homeowner pays off their mortgage around retirement, their housing costs may be significantly lower. This is when they are in need of extra cash for travel, health care and other things.

Reasons to rent

First, it will cost less each month to rent than to buy a home, even if it is the same neighborhood, the same size, and the same quality.

Sometimes homeowners are surprised to learn that buying a home is not always the smartest financial choice. For example, renters don't have to pay property taxes, homeowner's insurance premiums, and in most cases, maintenance fees. Experts say that homeowners pay about 3 percent of the total price of a home each year for these expenses.

Renters often have more freedom to move to other parts of the U.S., which is important when the job market is weak. If the right opportunity presents itself, they may be freer to find a job in another city without having to wait to sell their home.

If a homeowner needs to sell their home during a downturn, the homeowner risks losing a significant amount of money, even if home prices don't fall as hard as they did during the financial crisis.

However, the most important thing to look at when buying or renting a home is your situation.

Personal situation

Renting:Renting is usually suitable for people who do not plan to live in a certain place for more than two years.

Buying:After owning a home for more than a few years, owners can build more equity in their homes through repayments and market appreciation. Owning a home for the long term spreads out the various one-time buy-in expenses.

Financial Status

Renting:People without much savings may not be able to afford the down payment and other costs associated with home ownership, such as real estate taxes, home maintenance taxes, etc.

Buying a home:You need to be in good financial shape and have a steady source of income. Maintaining a home is not just about the down payment, but also about monthly mortgage payments, annual property taxes, and other costs such as house maintenance.

Investment Potential

Renting:There is no direct benefit to renting in terms of investment. However, renters do have the ability to invest money that could have been used to buy a home in other investments, earning a return on investment that may exceed that of the real estate market. However, this approach can also mean greater risk.

Buying a home:As a home evolves over time, the owner of the home can build residential equity. Equity comes from the down payment, the mortgage principal payoff and the market appreciation component.

From a historical perspective, returns in the real estate market have been relatively stable. Of course, home prices fall and there is a loss on the books. Perhaps the value of the home is even less than the loan amount.

Liquidity

Renting:People with limited cash flow should probably choose to rent. Although renting requires monthly rent payments, other than that, the renter has little or no other financial obligation to the property.

Buying:The owner of a home must have access to enough cash flow to ensure that he can pay the monthly mortgage payments, as well as property taxes, homeowner's insurance, etc. Overall, a residential homeowner should not spend more than 28% of his income on housing-related expenses. A homeowner should also be prepared to spend 1% of the value of the home each year on maintenance.

Tax Incentives

Renting:There are no tax incentives for renting a home.

Buying a home:Married or single homeowners are eligible for a mortgage interest deduction of up to $1 million, and married couples filing independently are eligible for an amount up to $500,000 each.

Enjoy

Renting:You can spend a lot of time and cash eating and drinking away from home. But sometimes coming home doesn't feel like home. Because you don't know when to move and won't spend money on expensive home furnishings, you don't enjoy using those items.

Buy a house:It takes a lot of time and money to decorate this home. But it's very fulfilling and stable.

Risk assessment

Renting:There is no risk. When the house price falls, you can change the house at will without the drag of the property.

Buying a house:When a house falls, it is too late to sell or cannot be refinanced, which will cause a loss on the books. Forcing a home to be bought for cash can result in real losses. If the house's surroundings change, the property is unlikely to be relocated.