According to the FDIC, thirty banks failed or were assisted during 2008: six were based in California, two in Florida, and five in Nevada. The New York Times reported in 2007 that Nevada (–36.1%), Florida 1-30.8%2, and California (–21.3%) were among the top five states in which home sales dropped (percentage drops in sales are given in parentheses)

the most between the fourth quarter of 2005 until the fourth quarter of 2006. Explain how real estate market conditions in these areas can explain almost 50% of bank failures in 2008.