Freddie Mac Details How Child Care Costs Impacts Homeownership
January 8, 2020
Having a child can create financial stress for homebuyers in pursuit of property, according to a new study from Freddie Mac.
The study noted the real price of child care (when adjusted for inflation) increased by 49 percent from 1993 to 2018, but the cost of housing increased by 14 percent during that period. Freddie Mac determined that the average family spends $715 a month on child care, with this figure rising to $758 when the main parent with child care responsibilities. The cost is steeper for children under five ($948 percent, or roughly 10.5 percent of the household’s average income). Freddie Mac also noted these costs took a greater toll on lower income households and were higher in the Northeast and West Coast.
“The list of expenses for a family can be never-ending, and we know from Freddie Mac’s semi-annual survey of homeowners and renters that the cost of everyday life presents challenges for many looking to buy or rent,” said 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 percent of the median rent.”
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