Inflation, deflation, stagflation and disinflation are in play, according to experts.

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Is your home’s value headed down a slippery slope?

Or, will your home value balloon, making that asset worth more than you could have hoped?

Or, maybe stay at a standstill?

I asked experts to weigh in what is to come for housing and mortgages, employment and the overall economy.

Mark Zandi, chief economist at Moody’s Analytics thinks high unemployment will put pressure on home prices later this year, despite help the market is getting from record low mortgage rates, government forbearance and low housing inventory.

“Home prices will be flat,” Zandi said. “If lawmakers don’t pass laws to assist in the next few weeks, we could be back into a recession.”

Assuming the pandemic ends, Zandi sees the inflation rate at 1- 2% with the national home price index rising 4%.

“The average stay in a home is 10 years” said Zandi. “Southern California home prices will increase 5% (a year) from the 2019 to 2029 timeline.”

Zandi estimates mortgage lending will total $2.8 trillion in 2020. Compare that to 2003, when lending totaled a record $3.5 trillion. Somewhere between 2023, 2024 and 2025 Zandi sees mortgage rates back to the 5% range.

Lending Tree Chief Economist Tendayi Kapfidze expects disinflation to occur over the next few years. About one out of every three U.S. workers, or 56 million, filed unemployment claims since the beginning of the pandemic.

“There will be significant, permanent changes to the economy, 6-7% unemployment compared to 3.5% pre-crisis,” said Kapfidze.

He sees mortgage rates going down further this year, with the 30-year fixed mortgage rate below 3.5% by the end of 2021. The current inflation of assets and housing side assets are not sustainable, he said.

“There is a downside risk of home prices dropping 5% across the U.S. next year,” he added.

How long will the government continue to provide helicopter money, virtually dropping money from the sky to keep the economy afloat?

“We are in a period of stagflation right now — that is, slow growth with rising prices,” said Michael Pento, president and founder of Pento Portfolio Strategie.

Pento pointed out the U.S. has $74 trillion of total debt. The national debt is 130% of GDP. The Fed’s balance sheet was $800 million in 2008 and $7 trillion today.

In addition, the Treasury Department expects to borrow $4.5 trillion by the end of the fiscal year on Sept. 30, 3 ½ times last year’s total of $1.28 trillion.

At what point does printing U.S. currency become worthless?

“When the market for U.S. dollars loses faith in its purchasing power,” said Pinto.

Pento foresees the 10-year Treasury rate at sub-zero and 30-year mortgage rates dropping below 2%.

“Massive defaults are coming with corporate debt at the nucleus,” he said.

Another example Pento offers is today’s stock prices.

“Today, the market cap of equities is 177% of GDP. At the height of the Nasdaq bubble, it was 140%, said Pento. “It’s a ping pong of recession, depression and stagflation.”

While nobody expects a depression, whoever is president will need to continue to spend money, said Anil Puri, director of Cal-State Fullerton’s Wood Center for Economic Analysis and Forecasting.

“To alleviate short-term pain, money needs to be spent now,” he said.

Modeling of past statistics is not a good guide for this event. This is a black swan event.

In the near term, inflation will not be an issue.

“Inflation picks up in 2023, 2024,” Puri said.

Asset prices go up with inflation. There is no possibility of that happening in the next two years. Puri predicts mortgage rates will stay close to where they are now until the end of 2021, and unemployment will be 6% by the end of 2021.

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Jeff Lazerson - Mortgage Columnist since 2011