Forget the credit crunch. What the housing market is suffering from is an asset crisis, where sinking home prices have made otherwise willing Americans wary of investing in a new home. That’s the opinion of Robert Toll, CEO of luxury public builder Toll Brothers. “What people are most scared of is looking like a schmuck,” Toll said during his presentation at the JPMorgan Basics and Industrials Conference in New York.

The solution? A tax credit for all home buyers to stimulate demand, much as the government offered in the 1970s. “We think the Congress frankly, is missing it this time around,” said Toll, a self-declared Democrat. The proposed $7,500 first-time home buyer tax credit “won’t do the daisy chain of home building and home buying any good if you only give the credit to those who are first-time home buyers. For the most part, who are they buying from? Guys who have homes, and guys that get out of those homes obviously aren’t first-time buyers … so the daisy chain won’t work.”

But the future is hard to predict, as Toll and other builders have discovered during the current downturn. Many had expanded into new geographic markets in search of stability, only to discover that the strategy has only resulted in bigger, more widespread problems to solve. “We’ve got a wide geographic footprint,” Toll said, referring to a colorful slide showing the builder’s national presence. “But damn it, it didn’t save us. … Having expanded nationwide, we find now that it did not protect us. We thought we would do the rolling depressions that came in the last recession, and that didn’t happen. Now it’s down pretty much everywhere except for New York City, Hoboken, and Jersey City.”

To view Toll's presentation, visit  and click on Toll Brothers.

Alison Rice is senior editor, online, for BUILDER magazine.