Buying is still cheaper than renting

Even with home prices rising, it's 44% cheaper to buy a home than to rent one, says a newly released study by online real-estate company Trulia. The study compares the total cost of owning versus renting in each of the 100 largest metropolitan areas.

There's a "but," however. (Three buts, actually.) Buying comes out on top under these three conditions:

• You will stay in the home seven years.
• You itemize federal tax deductions at the 25% bracket.
• Your mortgage interest rate is 3.5% or lower.

Trulia also assumes that buyers use a 30-year fixed-rate mortgage and make a 20% down payment.

Suppose mortgage rates rise to 4.4%, or 5.5%? Suppose you don't have enough deductions to itemize and take advantage of the mortgage tax break? Or what if you only plan to live in your home for three years? Or five?

Trulia answers those questions for residents of the 100 largest metro areas with a cool interactive map. Change the interest rate, length of stay or tax deductions and see whether it's still cheaper for you to buy or better to rent in your city.

Interest rates are key

Overall, in these 100 metros, buying is 44% cheaper than renting, Trulia says. That's not much different from a year ago, when Trulia found buying 46% cheaper.

Why, you might wonder, is buying still relatively cheaper? Aren't home prices going up? They are, says the Federal Housing Finance Agency (.pdf file): 

For the 12 months ending in January, U.S. prices rose 6.5%. The U.S. index is 14.4% below its April 2007 peak and is roughly the same as the September 2004 index level. National home prices have not declined on a monthly basis since January 2012.

That's the biggest jump in home values since 2006, says Bloomberg. The increase is led by rising prices in the West, including recoveries in parts of Nevada, Arizona and California that had been hit hard by foreclosures.

But even though prices rising, buying remains more affordable because of the current super-low interest rates.

Freddie Mac's Weekly Primary Mortgage Market Survey shows that homebuyers and refinancers paid an average of 3.54% on a 30-year fixed-rate mortgage this week. That's a drop from 3.63% last week and up only slightly from historic lows last winter, including an unheard-of 3.32% average recorded by Freddie Mac on Nov. 21.

Rents are rising

Another reason buying remains relatively affordable: Rents are rising.

The demand for rentals has grown rapidly recently, some of it collateral damage from the housing bust. Demand is from:

• Former homeowners who lost homes to foreclosure or short sales.
• Unemployed people who were living with family and now are working and can rent.
• Would-be homeowners who want to buy but haven't got a down payment or can't meet lenders' stiff requirements.
• Former homeowners who've decided they prefer the freedom and flexibility of renting.

"Women are getting married later, having kids later and out of wedlock, all prompting them to seek the convenience of large, full-service rental apartment buildings," adds CNBC's Diana Olick.

"What drives demand for single-family homes is, 'Oh honey, I'm pregnant,'" says Buck Horne, a housing analyst at Raymond James.

But those words are being uttered less and less. Horne claims the shift in female education, marriage and fertility rates will drive rental apartment demand going forward.

Where buying matters most and least

The biggest savings for homebuyers are in the Midwest, where your money buys more home.

"Buying ranges from 19% cheaper than renting in San Francisco to 70% cheaper than renting in Detroit," Trulia says in a press release.

Other cities where buyers' edge over renters is slimmest are Honolulu, San Jose, Calif., and New York.

More on MSN Money:

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• Should you buy a fixer-upper?
• Banks take aim at rich homebuyers
• Buy a home with no money down?
• Rent or buy? 4 factors to consider
• Cities with highest and lowest taxes