Quarterly report pursuant to Section 13 or 15(d)

Real Estate Inventories

Real Estate Inventories
9 Months Ended
Sep. 30, 2021
Real Estate Inventories [Abstract]  
Real Estate Inventories Real Estate Inventories
Real estate inventories are summarized as follows:
September 30, 2021 December 31, 2020
(dollars in thousands)
Deposits and pre-acquisition costs $ 54,797  $ 34,102 
Land held and land under development 317,323  221,055 
Homes completed or under construction 511,643  395,926 
Model homes 24,174  36,736 
Total real estate inventory $ 907,937  $ 687,819 
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, inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its estimated 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 our estimates of future home sales revenue, home construction costs, and the applicable discount rate, all of which are Level 3 inputs, refer to Note 14 - Fair Value for additional information.
For the three and nine months ended September 30, 2021 the Company recognized no real estate inventory impairments. For the three and nine months ended September 30, 2020, the Company recognized real estate inventory impairments of $0 and $3.4 million related to two communities in the California segment. In both instances, the Company determined that additional incentives were required to sell the remaining homes at estimated aggregate sales prices below the communities' previous carrying values. The fair values for the communities impaired were calculated using discounted cash flow models using discount rates ranging from 7%-10%.