Under One Roof: Combining Affordable Homes with Child Care Solutions

Affordable housing and high-quality child care help working parents maintain employment, support family economic mobility, and strengthen the economy. However, for many low-income families, soaring housing prices and child care costs are putting a strain on their budgets, forcing them to make difficult trade-offs, including whether to leave the workforce entirely to care for their children. The solution could be to combine these services under one roof.

Co-locating affordable housing and child care is a particularly promising solution. In fact, several cities and counties have approved new mixed-use developments that bring together housing, child care, and other community services.

Examining the experiences of local initiatives can help us better understand what role, if any, the federal government can play to support the co-location of affordable housing and child care. This blog post will lay the foundation for future research that digs deeper into co-location as one way to address these critical needs for families.

Affordable Housing Remains Out of Reach for Low-Income Households with Children

A persistent lack of available and affordable homes nationwide has driven up rent and homeownership costs, disproportionately impacting low-income households. Americans are increasingly cost-burdened, with nearly half of all renters paying more than 30% of household income on housing as a result. This has significant implications for households with children. Roughly 30% of children across the country lived in households with a high housing cost burden in 2022—a rate unchanged since 2019. Low-income households—those making under 80% of the area median—are even more susceptible to high housing cost burdens: 61% of low-income parents had housing costs more than 30% of their household incomes.

Despite these cost burdens, only one in five low-income families with children eligible for federal housing assistance actually receive it, largely due to funding limitations. The limitations in financial assistance received, coupled with high costs, place additional strain on low-income families and contribute to housing instability.

The lack of affordable housing near places of employment forces many low-wage working families to move farther from their jobs and endure lengthier commutes. Others remain in under-resourced communities, missing out on neighborhoods with better jobs and schools and creating additional barriers to long-term economic wellbeing. While affordable housing is crucial for working families, it is only one part of the equation.

Lack of Available, Affordable Child Care Has Financial Repercussions for Low-Income Families

There is not enough child care supply to meet demand, particularly for lower-income families. In most states, BPC found a larger child care gap—where potential demand for formal child care exceeds the number of child care slots available— in low-income census blocks, where more than 50% of the population earns less than 85% of the area median income.

Fifty-four percent of low-income parents (household income of less than $50,000) delayed major life purchases, such as a house or car, to afford child care. Lack of access to affordable child care also impacts parents’ ability to remain in the workforce. In one survey of parents, more than two-thirds said child care affected their ability to stay in the workforce (68%) and work more hours (66%).

While child care assistance, such as the Child Care and Development Block Grant (CCDBG), can directly help low-income families better afford child care, there are still limited options in accessing high-quality care near work or home. Unsurprisingly, a majority of parents who are out of the workforce say it’s important to have child care options that are close to their home (80%) or work (74%) for them to return to work.

Proposals for mixed-use developments that can bring together housing and child care can be a cost-effective strategy long-term.

A Perfect Pair: Affordable Housing and Child Care

Taken together, stable, affordable housing and child care are necessary for families’ economic wellbeing. When parents have child care solutions that meet their needs, they can more easily stay in the workforce. Thus, co-locating child care within or near housing developments that are affordable to lower-income families and accessible to centers of employment are a clear win-win.

Using the space on the bottom floor of an apartment building as a child care center or constructing a standalone early learning facility near an affordable housing development are ways to co-locate child care and affordable housing. Often, housing developments with co-located child care programs are funded through the Low Income Housing Tax Credit in combination with other state and local funding sources and include federally subsidized, rent-restricted units.

More research is needed on the effectiveness of co-location. Several communities—San Leandro, CA, Bloomington, IN, and San Diego County, CA—have piloted projects that co-locate affordable housing and child care. Local leaders in these jurisdictions pointed to insufficient supply and high costs of child care and housing in their regions as rationale to pursue co-location projects. While San Leandro and Bloomington are still in their infancy, San Diego County’s model offers key insights into their potential. The existing regulatory landscape can create additional barriers, but, San Diego County created a roadmap to help developers navigate regulatory requirements. A more comprehensive understanding of the barriers to development will be necessary to inform federal policymaking that supports co-location projects.

Looking Ahead

Given the limited body of research, there are several opportunities to further explore the efficacy of co-locating affordable housing and child care:

• Investing in Low-Income Communities Through Co-Located Housing and Child Care Developments: Understanding the potential short- and long-term social and economic impacts of such developments that are accessible to low-income families with children is a critical next step in this work.
• Understanding the Regulatory Landscape: Both the housing and child care sectors have complex regulations for constructing new developments that must be better understood before breaking ground.
• Maintaining Parental Choice: Better understanding of parental perspectives on child care delivery, alongside broader community needs, will be integral to the success of any co-location project.

Economic development strategies for under-resourced communities should consider the infrastructure needed to support working families. Co-located child care and affordable housing developments present policymakers with a potentially innovative intervention, one suited to jointly tackle the nation’s affordable child care and housing shortages, while supporting stable employment and income growth opportunities for working families in communities across the country.