Note 7 - Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

7. Fair Value Measurements

ASC Topic 820, Fair Value Measurements (“ASC 820”), defines fair value, establishes guidelines for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs, other than quoted prices in active markets, that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table sets forth the fair values and methods used for measuring the fair values of financial instruments on a recurring basis:

		Fair Value
Financial Instrument	Hierarchy	December 31, 2019		December 31, 2018
		(Dollars in thousands)
Cash and cash equivalents
Debt securities (available-for-sale)	Level 1	$	-	$	34,866
Marketable securities
Equity securities	Level 1	$	56,747	$	40,879
Mortgage loans held-for-sale, net	Level 2	$	197,021	$	149,211

The following methods and assumptions were used to estimate the fair value of each class of financial instruments as of December 31, 2019 and 2018.

Cash and cash equivalents (excluding debt securities with an original maturity of three months or less), restricted cash, trade and other receivables, prepaid and other assets, accounts payable, accrued and other liabilities and borrowings on our revolving credit facility. Fair value approximates carrying value.

Equity securities. Our equity securities consist of holdings in common stock stock and exchange traded funds and are recorded at fair value as with all changes in fair value recorded to other income / (expense), net in the financial services section of our consolidated statements of operations and comprehensive income. On January 1, 2018, we adopted ASU 2016-01 using a modified retrospective transition method. Prior to this amendment, our equity investments with readily determinable fair values were classified as available for sale with changes in fair value initially recorded through other comprehensive income, subject to an assessment to determine if any unrealized loss, if applicable, was other-than-temporary.

Debt securities. Our debt securities consist of U.S. government securities and are treated as available-for-sale investments and, as such, are recorded at fair value with all changes in fair value initially recorded through other comprehensive income, subject to an assessment to determine if any unrealized loss, if applicable, is other-than-temporary.     

Each quarter we assess all of our securities in an unrealized loss position (excluding marketable equity securities subsequent to the adoption of ASU 2016-01 – see Note 2 for further discussion of adoption of new accounting standards) for a potential other-than-temporary impairment (“OTTI”). If the unrealized loss is determined to be other-than-temporary, an OTTI is recorded in other-than-temporary impairment of marketable securities in the homebuilding or financial services sections of our consolidated statements of operations and comprehensive income. For the year ended December 31, 2017, we recorded pretax OTTIs of $0.3 million for certain marketable securities that were in an unrealized loss position as of period end. No OTTIs were recorded during the years ended December 31, 2019 or 2018.

The following tables set forth the amortized cost and estimated fair value of our available-for-sale debt securities.

	December 31, 2018
	Amortized Cost		OTTI		Net Amortized Cost		Fair Value
Financial Services
Cash and cash equivalents
Debt securities	$	34,866	$	-	$	34,866	$	34,866

The following table reconciles the net gain (loss) recognized during the year ended December 31, 2019 and 2018 on equity securities to the unrealized gain (loss) recognized during the period on equity securities still held at the reporting date.

	Year Ended December 31,
	2019		2018
	(Dollars in thousands)
Net gain (loss) recognized during the period on equity securities	$	11,797	$	(3,745	)
Less: Net gain (loss) recognized during the period on equity securities sold during the period		647		(534	)
Unrealized gain (loss) recognized during the reporting period on equity securities still held at the reporting date	$	11,150	$	(3,211	)

Mortgage Loans Held-for-Sale, Net.  Our mortgage loans held-for-sale, which are measured at fair value on a recurring basis include (1) mortgage loans held-for-sale that are under commitments to sell and (2) mortgage loans held-for-sale that were not under commitments to sell. At December 31, 2019 and 2018, we had $136.8 million and $130.8 million, respectively, of mortgage loans held-for-sale that were under commitments to sell. The fair value for those loans was based on quoted market prices for those mortgage loans, which are Level 2 fair value inputs. At December 31, 2019 and 2018, we had $60.2 million and $18.5 million, respectively, of mortgage loans held-for-sale that were not under commitments to sell. The fair value for those loans was primarily based upon the estimated market price received from an outside party, which is a Level 2 fair value input. The unpaid principal balances of all mortgage loans held for sale at December 31, 2019 and 2018 were $191.3 million and $143.9 million, respectively.

Mortgage Repurchase Facility. The debt associated with our Mortgage Repurchase Facility (see Note 17 for further discussion) is at floating rates that approximate current market rates and have relatively short-term maturities, generally within 30 days. The fair value approximates carrying value and is based on Level 2 inputs.

Senior Notes. The estimated values of the senior notes in the following table are based on Level 2 inputs, which primarily reflect estimated prices for our senior notes which were provided by multiple sources.

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
$250 Million 5.625% senior notes due February 2020, net	$	249,909	$	250,400	$	248,850	$	253,413
$250 Million 5.500% senior notes due January 2024, net		249,005		272,083		248,789		242,983
$500 Million 6.000% senior notes due January 2043, net		490,508		528,542		490,328		386,552
Total	$	989,422	$	1,051,025	$	987,967	$	882,948