REAL ESTATE INVENTORY AND LAND DEPOSITS

9 Months Ended

Sep. 30, 2018

Inventory consists of the following (in thousands):



	As of
	September 30, 2018		December 31, 2017
Real estate developed and under development	$	2,194,880	$	2,130,263
Real estate held for development or held for sale⁽¹⁾	65,971		76,552
Operating communities ⁽²⁾	899,937		659,398
Capitalized interest	94,512		90,496
Total owned inventory	3,255,300		2,956,709
Real estate not owned	13,811		2,527
Total real estate inventory	$	3,269,111	$	2,959,236

⁽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, properties where we have ceased development and/or marketing, 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
	September 30, 2018			December 31, 2017
	Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development
Raw	7,362	$	286,753	7,703	$	338,642
Partially developed	7,639	473,725		5,811	543,200
Finished	12,982	1,500,373		11,644	1,314,243
Long-term strategic assets	—	—		763	10,730
Total	27,983	$	2,260,851	25,921	$	2,206,815

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 September 30, 2018 and December 31, 2017, we had the right to purchase 4,715 and 5,037 lots under land option purchase contracts, respectively, for an aggregate purchase price of $395.8 million and $405.3 million, respectively. We do not have title to the properties, and the creditors generally have no recourse against the Company. As of September 30, 2018 and December 31, 2017, our exposure to loss related to our option contracts with third parties and unconsolidated entities consisted of non-refundable deposits totaling $47.9 million and $49.8 million, respectively.

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Interest capitalized - beginning of period	$	95,693		$	100,490		$	90,496		$	102,642
Interest incurred	20,164			20,762			59,979			62,187
Interest amortized to cost of home closings	(21,345		)	(21,789		)	(55,963		)	(65,366		)
Interest capitalized - end of period	$	94,512		$	99,463		$	94,512		$	99,463