In 1983, when I first met my wife-to-be, she was living in what she called “the slums of Cupertino.” When I commented that I wasn’t aware of any slums in Cupertino, she quite correctly said “no, I live in Rancho Rinconada.”
In fact, in those days, it was easy to find inexpensive housing in “Rancho Rinky-Dink,” as some called it. My wife paid less than $100K for her home in the late 1970s. This then-unincorporated area had a great location, convenient to just about everything in the Silicon Valley, but was less upscale than just about every surrounding area.
As I write this, Zillow shows six homes for sale in Rancho Rinconada. They range in price from about $1.7 million to about $2.9 million. The 1.7 million dollar home is just over 1,100 square feet, which is very close to the size of Oakmont’s smallest homes.
Needless to say, things have changed since my wife lived there. Rancho Rinconada looks nothing like it did in the 80s. It was shaped by economic influences beyond the control of community leadership or anyone living there.
Until recently, Oakland had pockets of wealth but also many areas of poverty. Meanwhile, across the bay, San Francisco was becoming a technology center. Wealthy, younger people were moving into the city, forcing some residents to look for less expensive homes that still provided ready access to their workplaces.
They found those homes across the bay in Oakland. Since then, Oakland (despite any proactive plans it’s leadership might have formulated), has seen real estate values increase dramatically.
How do longer-term residents of Rancho Rinconada and Oakland feel about the rising costs of real estate in their communities? Some are probably very pleased about the significant increases to their net worth. Others no doubt rue the development as unwanted gentrification.
Oakmont is currently being shaped by economic influences beyond the control of anyone living here, including the board. At first blush, this may seem to seriously underestimate what any board can do to influence where our community goes, so please allow me to explain.
The following facts about Oakmont seem incontrovertible. First, we’re located in a beautiful part of the world – in the middle of wine country and only an hour or so from the ocean. Second, our mediterranean climate is very appealing to most people (and most grapes). Third, our community features a high percentage of detached homes, so our housing density is significantly lower than virtually all other retirement communities. Fourth, we offer virtually every amenity and well over 100 clubs. Fifth, we’re located close to a major cosmopolitan city (San Francisco) and one of the foremost technology centers of the world (Silicon Valley). Housing values in both these places are some of the highest in the U.S. Sixth, our community features some rather large homes on large lots with views, many of which are now worth well over a million dollars and are appealing places to live for even quite wealthy people (although Bill Gates and Warren Buffett are still unlikely to move here). In summary, we’re an extremely attractive retirement spot.
The average Baby Boomer is now 63 years old and preparing to retire. This enormous Boomer retirement wave is about to crash onto the shores of retirement communities across the country.
So, the stage is set. Oakmont is an attractive place to retire in a wealthy part of the world, just as many people are looking to retire. What might happen?
This one is not too hard to predict, especially since it’s already happening. Oakmont is becoming, and will continue to become, a wealthier community.
Let’s turn our attention to the power of any Oakmont board to change this dynamic. What if an Oakmont board tries to govern too frugally for the average community member? They’ll get tossed out. Similarly, what if an Oakmont board tries to govern too lavishly for the average community member? They too will get tossed out. And this tossing will not take long, since on average, half of every Oakmont board turns over each year.
Oakmont boards must govern within a reasonably narrow range, or they’ll get tossed out. I guess this could be called the “Goldilocks Theory of Oakmont Governance.” Not too rich. Not too poor. Just right. Meanwhile, wealthier people will continue to move here and, in increasing percentages, run for the board.
Let’s say a relatively frugal Oakmont board (but not so frugal that it gets tossed out, at least right away) decides to not fix anything anywhere. Our buildings continue to age and things begin to break. Our open spaces turn brown.
Now, you have a fixer-upper community. Just as with a fixer-upper house, potential homeowners look at the community’s “bones.” All the things in the paragraph about Oakmont’s incontrovertible facts still apply, so they conclude Oakmont’s bones are good and we become an attractive investment to go along with the fact that our location is still to die for. People buy homes at relatively low prices, invest lots of money to fix them up and get on the boards so they can then fix up the community.
Oakmont IS changing, but the economic influences creating this change have been at work for years and will continue to dissolve whatever Oakmont was before and turn it into whatever Oakmont will be in the future. Boards, which must govern within a reasonably narrow range, simply cannot affect this trend in any meaningful way.
Change is the only constant. Oakmont is bigger than any of us and will be here long after all of us are gone.
Speculating about what Mr. Berger may or may not have intended Oakmont to be 60 years ago is useless. It simply doesn’t matter. Oakmont is continuing to evolve, regardless of Mr. Berger’s vision, just like Rancho Rinconada and Oakland are continuing to evolve regardless of what their original city planners might have had in mind.
Research shows that a very large percentage of retirees worry they’ll outlive their money. Housing values in Oakmont are increasing. Growth in our home equity diminishes the chances we’ll outlive our money. Reverse mortgages may not be the best financial vehicles on the planet, but tell that to a person who would be on the streets if not for their reverse mortgage or HELOC (home equity line of credit). Using these instruments, you can at least continue to live in your home after your liquid capital is depleted.
It is irresponsible, blatantly untrue and frankly baffling to suggest this board plans to gentrify Oakmont. The board is working with the community to understand and address the nature of economic influences in a way that ensures Oakmont remains a relevant and desirable place, where both present and future residents come to live and enjoy their lives here.