This study evaluates the accuracy of water level forecasting using two approaches: the hydrodynamic model SWMM and machine learning (ML) models based on the Nonlinear Autoregressive with Exogenous Inputs (NARX) framework. SWMM offers a physically based modeling approach, while NARX is a data-driven method. Both models use real-time precipitation data, with their predictions compared against measurements from a network of IoT sensors in a stormwater management system. The results demonstrate that while both models provide effective forecasts, NARX models exhibit higher accuracy, with improved Nash–Sutcliffe Efficiency (NSE) coefficients and 33–37% lower mean absolute error (MAE) compared to SWMM. Despite these advantages, NARX models may struggle with limited data on extreme flooding events, where they could face accuracy challenges. Enhancements in SWMM modeling and calibration could reduce the performance gap, but the development of SWMM models requires substantial expertise and resources. In contrast, NARX models are generally more resource-efficient. Future research should focus on integrating both approaches by leveraging SWMM simulations to generate synthetic data, particularly for extreme weather events, to enhance the robustness of NARX and other ML models in real-world flood prediction scenarios.