Child Care Now Costs More Than the Typical Family's Mortgage Bill

The typical American family can barely afford both a house and child care in most of the country’s largest cities. Monthly costs are now running roughly $2000 apiece for these two big family expenses, with the typical child care bill costing slightly more than a mortgage payment.

A recent analysis from real estate listing site Zillow found that the combined cost of buying a home and child care has swelled significantly since pre-pandemic times. In 31 of the 50 biggest U.S cities today, parents would need to devote more 60% of their monthly household income toward these expenses.

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Child care and mortgage costs rising

Parents may have felt like they had it bad in 2019, when the cost of housing and child care was 50% of the typical household’s income. But today, the average U.S. home value is 41% above what it was back then. Zillow’s analysis shows that between these home price increases, high mortgage rates and increases on other essentials like child care, the average U.S. family is in quite the financial pickle.

A mortgage payment and child care now takes up an astounding 66% of the average household’s monthly income in 31 of the 50 cities analyzed. That’s way more than the U.S. Department of Health and Human Services’ household budget recommendations, which caps housing costs at 30% of a household’s monthly income and child care at 7%.

And in five California markets — Los Angeles, San Diego, San Jose, San Francisco and Oxnard — the cost of housing and child care takes up 100% or more of the median household income for those areas. To give you an idea of just how expensive that is, the median household incomes in these cities are all above $100,000.

In terms of dollars, the typical American family would need to allocate $1,984 a month for child care and $1,973 a month toward a mortgage payment, assuming average home price in each city, a 10% down payment and 6.61% mortgage rate. Given that the median monthly household income is $6,640, that would only leave $2,683 for necessities like food and transportation, according to Zillow.

People who bought homes roughly between 2013 and 2020 are in a much better position than homebuyers today thanks to historically low mortgage rates during this period. It's been rough for those who bought a house more recently. Monthly mortgage payments for the average homebuyer skyrocketed to $2,637 in July 2023, an all-time high (the median home sale price also hit a record-breaking $380,250 the same month).

The housing affordability crisis isn’t expected to improve much in 2024. While mortgage rates have cooled a bit in recent months, data from Freddie Mac shows the average rate on a 30-year home loan jumped back up to 6.77% for the week ending Feb. 15. Even if rates fall according to experts' predictions, a forecast from Realtor.com expects they'll only drop to 6.5% by the year's end.

Home prices aren’t expected to see massive spikes like they did in the past few years, but they also aren’t likely to decrease much, keeping would-be buyers on the sidelines. Inventory is expected to remain low as homeowners stay locked into their current mortgage rates.

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10 cities with most unaffordable housing and child care

These are the 10 metros where housing and childcare expenses take up the greatest share of the median household income, according to Zillow.

1. Los Angeles, California (121% of local median income)
2. San Diego, California (113% of median income)
3. San Jose, California (109% of median income)
4. San Francisco (106% of median income)
5. Oxnard, California (100% of median income)
6. Riverside, California (93% of median income)
7. Seattle, Washington (92% of median income)
8. Boston, Massachusetts (92% of median income)
9. Providence, Rhode Island (91% of median income)
10. Fresco, California (87% of median income)

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