Freddie Mac reports that the cost of child care has increased 49% over the last 25 years while housing costs have increased by 14% from 1993 to 2018, leaving homebuyers with less money to buy or rent.
“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% of the median rent.”
Families spend an average of $715 a month on child care. This figure rises to $758 when the parent with child care responsibilities is employed.
Child care for families with younger children rises to $948. The average costs of child care for families with children under the age of 5 represented 10.5% of their average income in 2011.
Families making less than $1,500 a month who have two children under the age of 15 spend on average 40% of their income on child care, compared to the 6.7% for families making more than $4,500 a month.
Daycare costs account for 7.9% of incomes for families in Mississippi and 19.3% in Washington, D.C. Daycare costs were the highest in the northeast and the west coast.
The only expense to grow faster than child case was education (90%).
While child care costs continue to be a large budget item, their share of family income has not changed much time. The report found the income share for children between the ages of 0-5 increased from 9.3% in 1990 to 1037% in 2011. The financial burden for high-income families grew from 5.3% in 1990 to 7.8% in 2011.