I think we first need to acknowledge what those situations you describe actually are: they're artificial, government-created economic distortions.

There's no inherent, natural, or real economic basis to them. They're examples of inefficiently-allocated resources.

Artificially propping up existing economic distortions and inefficiencies just makes the situation even worse in the long run, by creating even more distortions and inefficiency.

If a home's nominal value does not match its real value, we should expect the price to drop. This may not be good for the homeowner(s) involved, of course, but it shouldn't be considered any different than any other poor investment.

Industries that exist primarily due to artificial economic distortions shouldn't be expected to survive, at least not in their present form. They're a burden on the real economy.

Social services also shouldn't be so necessary in a healthy economy. They're a brute-force (and ultimately unsuccessful) way that government tries to counteract some of the economic distortions and inefficiencies that government itself has introduced, typically through earlier market interference.

I don't see there being a "catch 22" here. It's simple what will have to happen at some point: the economic distortions and inefficiency will need to be undone, and those who made poor investment decisions will feel it the most.