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Fair Value Disclosures
9 Months Ended
Jul. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block] Fair Value Disclosures
Financial Instruments
The table below provides, as of the dates indicated, a summary of assets/(liabilities) related to our financial instruments, measured at fair value on a recurring basis (amounts in thousands):
 
 
 
 
Fair value
Financial Instrument
 
Fair value
hierarchy
 
July 31,
2019
 
October 31, 2018
Mortgage Loans Held for Sale
 
Level 2
 
$
169,251

 
$
170,731

Forward Loan Commitments — Mortgage Loans Held for Sale
 
Level 2
 
$
53

 
$
1,750

Interest Rate Lock Commitments (“IRLCs”)
 
Level 2
 
$
129

 
$
(4,366
)
Forward Loan Commitments — IRLCs
 
Level 2
 
$
(129
)
 
$
4,366


At July 31, 2019 and October 31, 2018, the carrying value of cash and cash equivalents and customer deposits held in escrow approximated fair value.
Mortgage Loans Held for Sale
At the end of the reporting period, we determine the fair value of our mortgage loans held for sale and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans and commitments using the market approach to determine fair value.
The table below provides, as of the dates indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale (amounts in thousands):
 
Aggregate unpaid
principal balance
 
Fair value
 
Excess
At July 31, 2019
$
167,015

 
$
169,251

 
$
2,236

At October 31, 2018
$
170,728

 
$
170,731

 
$
3


Inventory
We recognize inventory impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of inventory was determined using Level 3 criteria. See Note 1, “Significant Accounting Policies – Inventory,” in our 2018 Form 10-K for information regarding our methodology for determining fair value. The table below summarizes, for the periods indicated, the ranges of certain quantitative unobservable inputs utilized in determining the fair value of impaired operating communities:
Three months ended:
Selling price
per unit
($ in thousands)
 
Sales pace
per year
(in units)
 
Discount rate
Fiscal 2019:
 
 
 
 
 
January 31
836 - 13,495
 
2 - 12
 
12.5% - 15.8%
April 30
372 - 1,915
 
2 - 19
 
12.0% - 26.0%
July 31
530 - 1,113
 
2 - 9
 
7.8% - 13%
 
 
 
 
 
 
Fiscal 2018:
 
 
 
 
 
January 31
381 - 1,029
 
7 - 10
 
13.8% - 19.0%
April 30
485 - 522
 
10 - 16
 
16.9%
July 31 (1)
 
 
October 31
470 - 1071
 
4 - 23
 
13.5% - 16.3%

(1)
The impairment charges recognized were related to our decisions to sell lots in a bulk sale in certain communities rather than sell and construct homes as previously intended. The sale price per lot used in the fair value determination for these bulk sales ranged from $10,000 to $155,000.
The table below provides, for the periods indicated, the number of operating communities that we reviewed for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and, as of the end of the period indicated, the fair value of those communities, net of impairment charges ($ amounts in thousands):
 
 
 
Impaired operating communities
Three months ended:
Number of
communities tested
 
Number of
communities
 
Fair value of
communities,
net of
impairment charges
 
Impairment charges recognized
Fiscal 2019:
 
 
 
 
 
 
 
January 31 (1)
49
 
5
 
$
37,282

 
$
5,785

April 30 (2)
64
 
6
 
$
36,159

 
17,495

July 31
69
 
3
 
$
5,436

 
1,100

 
 
 
 
 
 
 
$
24,380

Fiscal 2018:
 
 
 
 
 
 
 
January 31
64
 
5
 
$
13,318

 
$
3,736

April 30 (2)
65
 
4
 
$
21,811

 
13,325

July 31 (3)
55
 
5
 
$
43,063

 
9,065

October 31
43
 
6
 
$
24,692

 
4,025

 
 
 
 
 
 
 
$
30,151


(1)
Includes impairments of $2.8 million (one community), $1.5 million (three communities), and $1.5 million (one community) located in our City Living, North, and South segments, respectively.
(2)
Includes impairments of $2.0 million (one community), $7.0 million (two communities), $8.0 million (two communities), and $0.5 million (one community) located in our City Living, North, Mid-Atlantic, and South segments, respectively, in our fiscal 2019 period. Includes $12.0 million of impairments from one community located in our North segment in our fiscal 2018 period.
(3)
Includes $7.3 million of impairments from two communities located in our Mid-Atlantic segment.
Debt
The table below provides, as of the dates indicated, the book value and estimated fair value of our debt (amounts in thousands):
 
 
 
July 31, 2019
 
October 31, 2018
 
Fair value
hierarchy
 
Book value
 
Estimated
fair value
 
Book value
 
Estimated
fair value
Loans payable (1)
Level 2
 
$
1,091,884

 
$
1,088,316

 
$
688,115

 
$
687,974

Senior notes (2)
Level 1
 
2,519,876

 
2,633,961

 
2,869,876

 
2,779,270

Mortgage company loan facility (3)
Level 2
 
150,000

 
150,000

 
150,000

 
150,000

 
 
 
$
3,761,760

 
$
3,872,277

 
$
3,707,991

 
$
3,617,244

(1)
The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.
(2)
The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.
(3)
We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.