Final answer:
During The Great Depression, a wave of foreclosed properties led to further falls in housing prices and resulted in more defaults. This created a feedback loop that worsened the financial situation, opposite of conditions that would lead to a rise in prices or cessation of defaults.
Step-by-step explanation:
When a wave of foreclosed properties hit the real estate market during The Great Depression, the impact on the housing market was substantial.
Housing prices tend to fall during financial crises because of increased supply from foreclosures and decreased demand as potential buyers are either unable or unwilling to purchase homes. These conditions likely lead to a destructive cycle, where falling housing prices could cause more homeowners to end up with mortgages worth more than the value of their homes, thus leading to more defaults on mortgages as homeowners might find it financially impossible or imprudent to keep up with payments.
In contrast, during prosperous times, housing prices might rise due to higher demand and solvency. However, during a financial crisis like The Great Depression or the 2008-2009 Great Recession, defaults are typically a contributor to the crisis, not a result that ceases because of the crisis, so 'defaults stopped' is not correct, and neither is 'housing prices rose' for the opposite reason: prices fall rather than rise in such scenarios.