The housing-market bubble and resulting severe recession have discouraged an entire generation of potential home buyers, because they regard ownership of a residence as far riskier than earlier generations did, a top U.S. central banker said Friday.

James Bullard, president of the Federal Reserve Bank of St. Louis, told a New York City audience that the 30 percent drop in housing prices doesn't reflect the result of a typical business-cycle low but is in fact a permanent change in the industry.

My sense is that the housing debacle of the past five years may have scared off a generation of potential homeowners, he said, attributing the changed sensibility to the massive -- and ongoing -- overhang of mortgage debt.

Bullard, speaking at the U.S. Monetary Policy Forum hosted by the University of Chicago's Booth School of Business, said that as of the third quarter of 2011, households with mortgages had $712 million of equity to support more than $9.88 billion of mortgage debt.

Expressed as a percentage of loan to value, that's about 90 percent, far above the average loan-to-value ratio from 1975 to 2005 of 58.4 percent.

The current cohorts of new home buyers likely see home ownership as a fundamentally riskier proposition than earlier cohorts and therefore may be far more likely to rent rather than own.

The post-bubble awareness of the dangers of mortgage debt constitutes a significant headwind for home builders and is creating long-term changes in what Americans expect from their residences.

Taken literally, this means that households would like to reduce square footage and remove amenities in exchange for lower levels of debt. The only realistic way for that to happen is to allow the natural depreciation in the housing capital stock to catch up with household desires.

Unfortunately, that is a long process.