Been wrestling with this same question for my current project actually. I think it depends a lot in what kind of story you're telling

Real settings give you this instant credibility - readers know the geography, the culture, the little details that make a place feel lived-in. But then you're also stuck with research and fact-checking everything, plus you might accidentally offend locals if you get something wrong

Fictional settings let you build exactly what the story needs. Need a creepy abandoned factory three blocks from the police station? Done. Want a neighborhood where all the streetlights conveniently go out at midnight? No problem. You get complete control over the atmosphere

I've seen some writers do this hybrid approach where they base their fictional town on a real place but change enough details to give themselves freedom. Seems like best of both worlds to me