Here are the Most (And Least) Affordable Metros for a Baby’s First Year, Including the Cost of Upgrading From Two to Three Bedrooms

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Birmingham, Alabama is the most affordable place to raise a baby, thanks to its relatively low childcare costs and the modest expense associated with moving to a bigger home. See where else it’s more affordable to add to your family—and where it’s not.

Buying a home is the most expensive purchase most people ever make. Raising a child, which costs an average of $233,610 from birth to age 17 for a two-parent household in the U.S., is also a costly endeavor.

But that $200,000-plus price per child is spread out over 18 years, and the price of a home is generally spread over 30 years. So exactly how much will it cost to add a baby to your household for the first year, factoring in the cost of upgrading to a home with one more bedroom, paying for childcare and shelling out cash for healthcare and other baby items? The answer depends on where you live.

Southern metros dominate the least expensive places for a baby’s first year. Birmingham, Alabama, where a baby’s first year costs an average of $16,383, is the most affordable place in the country to raise an infant, followed by Little Rock, Arkansas ($16,565) and Charleston, South Carolina ($16,566).

Washington, D.C., where parents spend an average of $35,017 during a baby’s first year, is the most expensive metro in the country to raise an infant. Boston ($31,307) comes in second, followed by nearby Worcester, Massachusetts ($30,610).

But what Birmingham, Washington, D.C. and the other metros included in this analysis have in common is that upgrading to a home with more bedrooms is a modest expense compared with childcare and baby supplies.

That’s from a Redfin analysis that calculates how much it costs to move up from a two-bedroom single-family home to a comparable three-bedroom single-family home, or from a one-bedroom to a comparable two-bedroom condo, in the 79 U.S. metro areas that meet the criteria of this analysis. We added the difference in annual mortgage payments to average yearly childcare costs for the state in which the metro is located, plus uniform healthcare and baby item expenses, to come up with the total cost.

Ben Price, a Redfin agent in Birmingham, moved to the area from Chicago partly because it’s a more affordable place to raise children. “With three active kids in the Chicago suburbs, my wife and I found that we were always behind, both in time and finances. The cost of living with three children was too much to handle,” Price said. “At first, my wife was reluctant to consider moving to a more affordable area—but then I showed her homes for sale in Birmingham on Redfin.com. When she saw how much more house we could afford there without sacrificing in terms of school ratings, she was in. Now we own a five-bedroom, five-bathroom home in Birmingham, more than we could afford in expensive parts of the country.”

Two of the 10 most affordable places to raise a baby, Austin and Atlanta, are also on our list of the most popular destinations for Redfin.com users who are looking to move to a different metro area. And three of the 10 most expensive places to raise a baby—Washington, D.C., San Francisco and Los Angeles—are also on our list of places Redfin users are most-often looking to leave.

In Birmingham, just $1,378, or 8.4 percent, of the total cost of a baby’s first year represents the annual difference in mortgage payments between a typical two-bedroom home and a three-bedroom home, while $5,858 is the cost of childcare. And in D.C., the upgrade from two to three bedrooms accounts for just $2,204, or 9.3 percent, of the total, with childcare coming in at an average of $23,666 per year. Even in a place like San Jose, where home prices are sky high, the $3,745 cost of upgrading from a two- to three-bedroom home is significantly lower than the $16,542 annual cost of childcare.

“The most costly part of adding to your family is the time put into taking care of a new baby, whether it’s you or your childcare provider,” said Redfin chief economist Daryl Fairweather. “If you decide to stay at home to take care of your baby, you may have to forego income and pause your career progression. If you hire a nanny, you will need to pay them a competitive wage. And if you happen to find an affordable daycare provider, you may have to sit on a waiting list until a spot opens up for your child. That extra room for a nursery is a relatively small monthly expense compared to childcare, no matter where you live.”

Because childcare makes up such a significant portion of the cost of a baby’s first year, the places with the most expensive childcare are the ones where it costs the most to raise a baby. For instance, Washington, D.C., where a baby’s first year is most expensive, is the most costly metro in the country for childcare, and Birmingham is the least expensive on both counts. But that pattern doesn’t hold true in every area. For instance, childcare in Dayton, Ohio costs about $1,000 less per year on average than it does in Grand Rapids, Michigan. But upgrading from a two-bedroom to a three-bedroom home will cost about $1,200 more per year in Dayton, which makes it a more expensive place to have a baby.

For families going from a one- to two-bedroom condo, the list of most affordable metros to have a baby are still dominated by the South: Louisville ($16,627, with $1,222 coming from the cost of an extra bedroom); Cape Coral, Florida; Jacksonville and Atlanta. And the most expensive places to move from a one- to two-bedroom condo and pay for an infant’s other expenses are similar to the places where it costs the most to upgrade a single-family home: Washington, D.C. tops the list ($34,294, with the cost of an extra bedroom accounting for $1,481), followed by San Francisco and Boston.

“In the D.C. area, finding a home for a family in the city is becoming increasingly unaffordable, particularly in the neighborhoods with highly rated schools,” said local Redfin agent David Ehrenberg. “But one thing to keep in mind is that while paying for infant childcare is costly, the city of D.C. may be less expensive than its surrounding suburbs once the child is a bit older. D.C. public schools offer free pre-K for three and four-year-olds, while local Maryland and Virginia counties do not.”

Methodology

For this report, we used linear regression to model the relationship between the sale price of a home and many of its features for homes sold in 2018 in each U.S. metro area tracked by Redfin. To be included in this dataset, a metro area must have had at least 1,500 homes that met the criteria of this analysis. We broke out the data by metro area and controlled for many features of the homes, including location, size of the home, number of bathrooms, month of listing, Walk ScoreⓇ, median price per square foot of homes sold in the same zip code in the previous year, drive time and transit time to its local business district, age of the home, housing density in the zip code, new construction and whether the home had a view. For condos, we determined the percent increase in the sale price correlated with purchasing a two-bedroom condo relative to a one-bedroom condo. For single-family homes, we determined the percent increase in the sale price correlated with purchasing a three-bedroom home relative to a two-bedroom home. Then, using single-family homes as an example, we calculated the monthly mortgage payment of a median two-bedroom home and the predicted sale price of a three-bedroom home.

We then multiplied the difference in monthly mortgage payments by 12 to come up with the difference in annual payment. Monthly mortgage calculations are based on a 20% down payment and a mortgage rate of 4.08% on a 30-year fixed mortgage. We used data from ChildCare Aware of America to add the yearly cost of childcare by state. Baby items and healthcare costs can vary greatly from person to person, particularly due to the various types of health insurance. For the purpose of this analysis we used data from BabyCenter and BMO Harris to estimate flat costs: $7,850 for baby items, including diapers, clothing and other supplies, and $1,297 for out-of-pocket healthcare expenses.

Published on May 8th, 2019
Updated on July 15th, 2019

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dana-olsenredfin-com

As a data journalist at Redfin, Dana Olsen writes about the numbers behind real estate trends. Her dream home is either on the beach or in the mountains, but either way, it has a comfortable window seat and cozy fireplace. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our Why Redfin page.

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