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Fair Value Disclosures | 9 Months Ended
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Jul. 31, 2022
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, 2022 |  | October 31, 2021
Residential Mortgage Loans Held for Sale |  | Level 2 |  | $ | 121,218 |  |  | $ | 247,211 |
Forward Loan Commitments — Residential Mortgage Loans Held for Sale |  | Level 2 |  | $ | 1,464 |  |  | $ | 1,782 |
Interest Rate Lock Commitments (“IRLCs”) |  | Level 2 |  | $ | (3,207) |  |  | $ | (1,773) |
Forward Loan Commitments — IRLCs |  | Level 2 |  | $ | 3,207 |  |  | $ | 1,773 |
Interest Rate Swap Contracts |  | Level 2 |  | $ | 29,128 |  |  | $ | 10,330 |
At July 31, 2022 and October 31, 2021, the carrying value of cash and cash equivalents and customer deposits held in escrow approximated fair value. The fair values of the interest rate swap contracts are included in “Receivables, prepaid expenses and other assets” in our Condensed Consolidated Balance Sheets and are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of each swap contract. Although the Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its interest rate swap contracts fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of July 31, 2022, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our interest rate swap contract positions and have determined that the credit valuation adjustments were not significant to the overall valuation of our interest rate swap contracts. As a result, we have determined that our interest rate swap contracts valuations in their entirety are classified in Level 2 of the fair value hierarchy. 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 |  | Fair value greater (less) than principal balance
At July 31, 2022 | $ | 121,494 |  |  | $ | 121,218 |  |  | $ | (276) |
At October 31, 2021 | $ | 244,467 |  |  | $ | 247,211 |  |  | $ | 2,744 |
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 the aforementioned inventory was determined using Level 3 criteria. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. See Note 1, “Significant Accounting Policies – Inventory,” in our 2021 Form 10-K for additional information regarding our methodology for determining fair value. Impairments on operating communities were insignificant during the three month and nine month periods ended July 31, 2022 and 2021 and, accordingly, we did not disclose the ranges of certain quantitative unobservable inputs utilized in determining the fair value of such impaired operating communities. In the three and nine-months ended July 31, 2021, we recognized $11.1 million of impairment charges on land owned for future communities relating to five communities. The estimated fair value of these communities in the aggregate, net of impairment charges, was $25.6 million. For the majority of these communities, the estimated fair values were determined based upon the expected sales price per lot in a sale to another builder. The sales price per lot utilized in determining fair values was approximately $86,000 per lot. 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, 2022 |  | October 31, 2021
| Fair value hierarchy |  | Book value |  | Estimated fair value |  | Book value |  | Estimated fair value
Loans payable (1) | Level 2 |  | $ | 1,202,290 |  |  | $ | 1,195,745 |  |  | $ | 1,014,042 |  |  | $ | 1,021,662 |
Senior notes (2) | Level 1 |  | 2,000,000 |  |  | 1,942,321 |  |  | 2,409,856 |  |  | 2,577,818 |
Mortgage company loan facility (3) | Level 2 |  | 113,705 |  |  | 113,705 |  |  | 147,512 |  |  | 147,512 |
|  |  | $ | 3,315,995 |  |  | $ | 3,251,771 |  |  | $ | 3,571,410 |  |  | $ | 3,746,992 |
(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.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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