The Leading Source of Childcare for Upper Middle Class

Upper-middle-class families are more likely than low or upper-class familiesⁱ to rely on their extended family for childcare, according to the Zillow® Housing Aspirations Report™  (ZHAR)ⁱⁱ.

Almost 40 percent of upper-middle class parents surveyed said they rely on extended family for childcare, compared 29 percent of low-income parents and 33 percent of high-income  parents.

Zillow’s finding highlights another way middle-class families are struggling to get ahead as living expenses and commercial childcare costs soar and incomes remain  flat.

Incomes are up 2.6 percent over the past year, while home values are up over 7 percent. Housing affordability is a growing concern across the country, and in some of the most expensive housing markets, a typical mortgage payment requires 40 percent or more of the area’s median monthly  income.

Commercial childcare can cost up to $21,000 a yearⁱⁱⁱ, which only the most affluent households can afford. Some parents in families making the least may not earn enough at a full or part-time job to cover the cost of childcare, so having a stay-at-home parent often makes financial  sense.

But the families in the middle, often with two working parents making moderate incomes, can’t afford to send their kids to childcare and also can’t afford for one parent to stay  home.

“Housing costs and child care are among the two largest budget items for working families, costing as much $43,000 a year in urban areas and over $34,000 a year in the suburbs,” said Zillow Chief Economist Dr. Svenja Gudell. “While many Americans are tied to the places they live for a variety of personal and financial reasons, it’s necessary for some households to live near family in order to make ends meet. Sometimes extended family might move together to provide childcare, or grandparents might even follow their children when they move to a new city to help care for their  grandkids.”

About 26 percent of respondents said proximity to family drives their decision about where to live. This trend is more pronounced among low-income households in the nation’s most expensive housing markets. In San Francisco, for example, almost half of all low-income respondents said family completely impacts their decision on where to  live.

Across all income brackets, 33 percent of American households with children rely on extended family for childcare assistance. Almost one-in-five households said they get help from family to cover living expenses, and 11 percent turn to extended family for help with  eldercare.

Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in  Seattle.

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ⁱ For this analysis, Zillow divided annual household incomes into five levels for each metro area, resulting in income levels ranging from lowest to highest. Upper-middle class for this analysis is defined as the second-highest income  quintile.

ⁱⁱ The Zillow Housing Aspirations Report is computed from an Ipsos poll which combines sample of 10,000 U.S. adults from 20 U.S. core-based statistical area (CBSA) metropolitans (Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Las Vegas, Miami, Minneapolis, New York, Philadelphia, Phoenix, St. Louis, San Diego, San Francisco, San Jose, Seattle, Tampa, and Washington, D.C.) age 18+, surveyed online in English. The survey has a credibility interval of plus or minus 1.1 percentage points for all respondents from the 20 U.S. metropolitans and approximately 5.0 percentage points for an individual U.S. metropolitan. Post-hoc weights were made to the population characteristics on gender, age, region, and race and ethnicity. This version of the survey was conducted March 1^st – 15^th, 2017. For more information about conducting research intended for public release or Ipsos’ online polling methodology, please visit the Public Opinion Polling and Communication  page.

ⁱⁱⁱ Zillow analysis on living expenses in urban vs. suburban neighborhoods  here.
^iv Among households with at least one child,  2015.

SOURCE  Zillow