Landsea Homes Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate Inventories

Real Estate Inventories

9 Months Ended

Sep. 30, 2022

Real estate inventories are summarized as follows:


	September 30, 2022		December 31, 2021
	(dollars in thousands)
Deposits and pre-acquisition costs	$	98,764	$	65,724
Land held and land under development	216,945		243,310
Homes completed or under construction	846,291		526,950
Model homes	17,418		8,808
Total real estate inventories	$	1,179,418	$	844,792

Deposits and pre-acquisition costs include land deposits and other due diligence costs related to potential land acquisitions. Land held and land under development includes costs incurred during site development such as development, indirect costs, and permits. Homes completed or under construction and model homes include all costs associated with home construction, including land, development, indirect costs, permits, materials, and labor.

In accordance with ASC 360, Property, Plant, and Equipment, real estate inventories are stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. The Company reviews each real estate asset at the community-level, on a quarterly basis, or whenever indicators of impairment exist. We generally determine the estimated fair value of each community by using a discounted cash flow approach based on the estimated future cash flows at discount rates that reflect the risk of the community being evaluated. The discounted cash flow approach can be impacted significantly by the Company’s estimates of future home sales revenue, home construction costs, pace of homes sales, and the applicable discount rate, all of which are Level 3 inputs.

For each of the three and nine months ended September 30, 2022 and 2021 the Company did not recognize any impairments on real estate inventories.