REAL ESTATE INVENTORY AND LAND DEPOSITS

6 Months Ended

Jun. 30, 2017

Inventory consists of the following (in thousands):



	As of
	June 30, 2017		December 31, 2016
Real estate developed and under development	$	2,155,644	$	2,074,651
Real estate held for development or held for sale⁽¹⁾	164,951		183,638
Operating communities ⁽²⁾	774,939		650,036
Capitalized interest	100,490		102,642
Total owned inventory	3,196,024		3,010,967
Real estate not owned under option agreements	4,003		6,252
Total real estate inventory	$	3,200,027	$	3,017,219

⁽¹⁾ Real estate held for development or held for sale includes properties which are not in active production. This includes raw land recently purchased or awaiting entitlement, future phases of current projects that will be developed as prior phases sell out and long-term strategic assets.

⁽²⁾ Operating communities consist of all vertical construction costs relating to homes in progress and completed homes for all active production of inventory.

The development status of our land inventory is as follows (dollars in thousands):



	As of
	June 30, 2017			December 31, 2016
	Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development
Raw	4,875	$	252,280	7,142	$	403,902
Partially developed	9,893	744,616		8,037	501,496
Finished	11,412	1,309,885		11,318	1,336,709
Long-term strategic assets	1,196	13,814		1,489	16,182
Total	27,376	$	2,320,595	27,986	$	2,258,289

Land Deposits — We provide deposits related to land options and land purchase contracts, which are capitalized when paid and classified as land deposits until the associated property is purchased.

As of June 30, 2017 and December 31, 2016, we had the right to purchase 7,331 and 7,583 lots under land option purchase contracts, respectively, for an aggregate purchase price of $523.5 million and $542.6 million as of June 30, 2017 and December 31, 2016, respectively. We do not have title to the properties, and the creditors generally have no recourse against the Company. As of June 30, 2017 and December 31, 2016, our exposure to loss related to our option contracts with third parties and unconsolidated entities consist of non-refundable option deposits totaling $53.0 million and $37.2 million, respectively, in land deposits related to land options and land purchase contracts.

Capitalized Interest — Interest capitalized, incurred and amortized is as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Interest capitalized - beginning of period	$	103,059		$	110,962		$	102,642		$	105,148
Interest incurred	20,711			22,201			41,425			44,445
Interest amortized to cost of home closings	(23,280		)	(22,100		)	(43,577		)	(38,530		)
Interest capitalized - end of period	$	100,490		$	111,063		$	100,490		$	111,063