What's keeping some people from buying a house? Child care is ridiculously expensive
Homebuyers are left with less money to buy or rent a home due to the rising cost of child care, a new insight from Freddie Mac said.
The real price of child care has increased by 49% over the last 25 years, yet the cost of housing has only increased 14% in 25 years.
“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,” said Sam Khater, Freddie Mac’s chief economist. “Specifically, we find they, on average, pay about half of the median mortgage payment and nearly eighty percent of the median rent.”
On average, a family will spend $715 a month on child care, which rises to $758 when the main parent with child care responsibilities is employed. When families have younger children, the cost is at $948, a month.
That leaves much less money left over for housing expenses.
In 2011, the average child care expenditure for families with children under 5-years-old was 10.5% of their average income.
Families that make less than $1,500 a month who have children under the age of 15 spent an average of 40% of their income on child care, Freddie Mac reported.
Meanwhile, families who make over $4,500 a month spent only 6.7% of their income on child care.
This factor also varies by state. In Mississippi, for example, 7.9% of a family’s income went to child care, whereas in Washington, D.C. it’s 19.3%.
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