Robert I. Toll, chairman and CEO of Toll Brothers in Horsham, Pa., has been in the home building business for a long time. But he's never seen the likes of 2007 before.

Robert I. Toll, chairman and CEO of Toll Brothers in Horsham, Pa., has been in the home building business for a long time. But he's never seen the likes of 2007 before.

"The last fiscal year was the most challenging one of the 40 years that Toll Brothers was in business," Toll said today (Dec. 6) during the company's fourth quarter earnings call.

Toll Brothers' results reflected those challenges. The company lost $81.8 million last quarter, which was its first quarter with a loss since it went public--that's 85 consecutive quarters without a loss.

Toll Brothers' $315 million in non-cash, pre-tax write downs and impairments were the primary drivers behind its negative performance in the forth quarter. Toll's CEO blamed his company's difficult quarter on "weak consumer confidence." He said the company's biggest hurdle is not convincing people that they want a new home, but rather it's that prospective buyers fear they won't be able to sell their current home.

And a recession could hamper people's ability to sell their homes even further. Toll said he thinks the economy probably will fall into a recession, though he cautioned that he's no economist. "I have no idea how deep [it will be] or how long it would be," he said.

Despite all of that bad news, Toll didn't characterize the demand picture as all that bleak. "As soon as we remedy the fear of dropping home prices, we may see a faster and stronger recovery than we anticipated," he said.

Toll said traffic at his communities is currently at levels not experienced since the mid-1990s, but Web visits were up 8% in October. That, along with what buyers tell, gives him reason for hope.

"Those people we are seeing definitely want to buy," Toll said.

The builder's long-term optimism is also reflected in its discounting and land positions. The company has taken a conservative attitude and limited discounting (unless it's for a spec home). With its cash and liquidity. Toll isn't under the gun to launch massive fire sales.

"At a certain point, I'd rather not sell any [land] and sit on the lot," Toll said.

The CEO isn't as committed to keeping land in the builder's less attractive lots. It has trimmed land by approximately 35% over the past 18 months and would be open to a deal such as the one recently sealed between Lennar Corp. and Morgan Stanley. Toll noted great potential to both shed excess land and generate liquidity in such an arrangement.

But Toll said he's also keeping deal teams on the ground in nearly all of his regions to look for land deals. The only regions where the company doesn't have a significant presence are Georgia (where it just entered), Phoenix (where a team is in place, but isn't active), Chicago, and, of course, Michigan. "We're definitely not active and have no team there," Toll said.