Combine strawberries and sugar in a small saucepan, adding just enough water to prevent sticking. Simmer over medium-low heat for 20-30 minutes, stirring occasionally, until a jam-like consistency is reached. Adjust thickness with water if needed. Once reduced to 1/4 cup, leave it to cool.

While the strawberry reduction is cooling, beat the softened butter in a mixing bowl and cream cheese together with a mixer until creamy, about 2-3 minutes.

Add the cooled strawberry reduction and vanilla extract to the cream cheese and butter mixture. Continue to beat on medium speed until fully incorporated.

Add the sifted powdered sugar to the bowl while continuing to beat. Add the sugar slowly to prevent it from flying everywhere. Beat until the frosting is light and fluffy, an additional 1-2 minutes.