Rising Child Care Costs Put a Squeeze on Homeownership
January 16, 2020
Child care costs have jumped 49% over the last 25 years. The cost of housing has increased by 14% in comparison, according to a new analysis from Freddie Mac.
“The list of expenses for a family can be never-ending … and presents challenges for many looking to buy or rent,” says Sam Khater, Freddie Mac’s chief economist. “One of the major challenges, when it comes to affording a home, is the high cost of child care. Our analysis finds that those families paying for child care generally are left with less money for housing. Specifically, we find they, on average, pay about half of the median mortgage payment and nearly 80% of the median rent.”
Freddie Mac’s research found that families spend, on average, $715 a month on child care. That rises to $758 per month if the main parent with child care responsibilities is employed (the mother in most cases). Families with younger children (to age 4) face even higher costs, averaging $948 per month.
Not surprising, families who make lower incomes face higher burdens from child care expenses. For instance, a family making less than $1,500 a month spent an average of 40% of their income on childcare. Families making more than $4,500 a month spent about 6.7% of their income on child care.
Source: "Rising Child Care Costs Put a Squeeze on Homeownership" REALTOR® Magazine (January 13, 2020)