When the housing market was booming, nobody benefited more than Bob Toll, C.E.O. of Toll Brothers and creator of the McMansion. Sales of Toll Brothers’ trademark homes topped $6 billion at the peak of the market, making the company the largest luxury-home builder in the country. Now, with the homebuilding industry suffering, Toll acknowledges that we’re in uncharted territory. Here, he shares strategies for navigating it.

You’ve been quoted as saying that the housing business is in a depression. Do you still think that?

Yes, things are real tough. It’s tough to sell. It’s easy to buy, but nobody wants to. The lack of confidence in the market is greater than it was in 1981, greater than it was in 1990. And 1974 was perhaps as bad, but it was for a shorter period of time.

How will we know when a turnaround is coming?

Every week, we track new-home sales in the 300-plus communities we sell from. We have been pretty much sticking with the same number in traffic and deposits. If we continue with that, we might be willing to say we’ve reached the bottom now. The demand is there. When we do everything we can—run a special, work the phones—we can sometimes make it happen. But that’s not terribly meaningful. If you stay at the bottom, it doesn’t feel good. It’s hard to make a guy feel good if he’s stuck in the mud up to his neck, even though it’s not getting any worse.

Would you buy a house right now if you were in the market?

Actually, new-home prices are moving up. If you’re waiting for another 10 percent drop in new-home prices, you may have missed your chance.

The problem is that people are having a hard time selling their old homes in order to move into other ones. It isn’t that there are no buyers. It’s that people are reluctant to drop their prices by more than 10 percent to find a buyer. So the market is frozen.

What about real estate as an investment? Is this a good time to hunt for bargains?

Real estate has been a pretty great investment over the past 200 years. If you look at things from farther away than 10 feet, buying a home has created most of the wealth for families in the U.S.  But this is like advising people on whether they should jump into the stock market. When the market is down, people are reluctant to do it. Over a longer period of time, the market can usually be counted on to go back up 10 percent. But people get scared. And they’re scared right now.

Which real estate markets will turn around first?

Everybody thinks Phoenix is down-and-out and will be for a long time to come. I don’t think so. Florida is also counted out. But that will also turn around faster than people expect.

And the laggards?

Las Vegas. It’s been over-the-top.

What about Barack Obama impresses you?

We need some excitement to get things moving again. Obama is an exciting candidate. If he can excite people enough that they would again view the cup as half full as opposed to half empty, then you would have some restoration of confidence in the homebuilding industry.

Stocks, real estate, gas prices—got a question for Condé Nast Portfolio’s overqualified advisers? Email experts@portfolio.com.