Inflation need be neither instaneous nor homgenous; your home value is still going to increase at or above that rate of inflation.
Inflation, by definition, means that assets cost more. That applies to your biggest asset, your house, as well.
Nor is home ownership "home indebtedness." Unless you paid too much originally...and even then it is merely a matter of time before your appreciating asset overtakes your depreciating debt.
Remember: inflation reduces your debt, too.
No, inflation is an increase in the money supply. The nonlinear effect on prices depends on the past history of the system.