(MONEY Magazine) – Q My wife and I are selling our house in Stanwood, Wash. and moving to Phoenix. (We're hoping to net $70,000.) But with the real estate market so uncertain, we're not sure whether to buy or rent there. What do you think?

ANSWER The first thing you need to ask yourself is how long you plan to live in Phoenix. If you'll stay less than two years (five in a city that's growing more slowly than this one), go ahead and rent because by the time you pay closing costs and broker's fees on a purchase and sale, you'll lose 5% to 10% of the home's value.

If you plan to stay longer, the math gets fuzzier. Unlike some cities, Phoenix has an abundant supply of single-family rental housing. And home prices have risen faster than rents lately, which has made renting unusually attractive. Consider our simplified calculations: You can rent a three-bedroom, two-bath house in a nice neighborhood for about $14,600 a year, including renters insurance. The same home might sell for $450,000. With your $70,000 down payment, if you took out a 30-year fixed-rate mortgage, you'd be spending some $31,100 annually after tax deductions, including insurance, property taxes and maintenance.

Measured by cash flow, renting is cheaper, hands down. But home ownership is also an investment decision. To make up the $16,500 annual difference in cash outlay, your property would have to appreciate by about 3.7% a year. If you think you'll see growth of that much or more, buying might be the way to go. But the market is tough to call. Phoenix's prices are up 11.8% from a year ago, according to the National Association of Realtors, but that rate obviously can't be sustained. And if Phoenix's long-term growth rate were to drop back to the U.S. historical average of 6.7% appreciation a year, the adjustment could be painful.

In the end, the decisive factors might be psychological. Home ownership tends to make people feel they are a part of their community; and in surveys, people rank it right behind health as a thing that makes them happy. It's just not clear that--in Phoenix, at least, and at today's prices--it will make them rich.

HOME-LOAN RATES

TEMPORARY RELIEF Rates have dropped roughly a third of a point but may increase again this fall, according to HSH Associates.

[DOWN] 1-year adj. 6.03% [DOWN] 5/1 adj. 6.35% [DOWN] 15-year fixed 6.31% [DOWN] 30-year fixed[1] 6.53% [DOWN] 30-year fixed jumbo[2] 6.71% [DOWN] Home-equity loan 8.12% [DOWN] Home-equity credit line 8.63% Current average One year range [UP] Up from previous month [DOWN] Down from previous month

NOTES: As of Aug. 18. [1] $417,000 or less. [2] More than $417,000. SOURCE: HSH Associates.

DEALS: 15-Year Fixed-Rate Mortgages

These banks offer some of the best loan rates and terms. Use them as a benchmark for your own shopping. Visit hsh.com for more deals.

NOTES: As of Aug. 18. Rates and terms subject to change. SOURCE: HSH Associates.

Prices are falling... 26 of 151 metro areas saw declines in median home prices in the second quarter of 2006.

...but owners are feeling crunched. 1 in 3 homeowners worry that rising monthly payments, especially property taxes and energy costs, will force them to sell.

SOURCE: National Association of Realtors.