The sheer volume of institutional purchases in 2013 drove much of the housing price appreciation, without supporting property fundamentals, and that is alarming some experts.

First a little context.

In the pre-meltdown market, about 85% of home sales were individuals purchasing with a mortgage, about 10% were all-cash sales, and about 3-5% were distressed sales.

Flash-forward to 2013 and that sanity is absent — something like 40% of home sales were individuals using a mortgage, 40% were all-cash, more than about 15% were distressed sales and 5% were flips.

More specifically, distressed sales rose to a three-year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012.

RealtyTrac’s numbers show that cash deals were 42% of all U.S. house sales in December, up from 38% in November, and up from 18% in December 2012. In Florida, Wisconsin, Alabama, South Carolina and Georgia cash sales were more than 50% of homes sold in 2013.

Given all the talk of the housing and economic recovery, it does seem strange that distressed sales are high and still rising.

The steady climb of interest rates since mid-2013 has thrown a little cold water on investor mania, but total investor purchases were almost 30% of all home sales since 2009. And mortgage applications are residing at 1997 levels, down 65% from the 2005 highs.

And yet despite this, national home prices grew by 14% in 2013, coming on the heels of a 9% rise in 2012.

“The simple reality is that there has really been very little actual recovery in housing," says Lance Roberts, at STA Wealth Management. "The optimism over the housing recovery has gotten well ahead of the underlying fundamentals. While the belief was that the Government, and the Fed's interventions would ignite the housing market creating a self-perpetuating recovery in the economy — it did not turn out that way.

“Instead, it led to a speculative rush into buying rental properties creating a temporary, and artificial, inventory suppression," Roberts says.

U.S. housing is now the most unaffordable that it ever has been, says Anthony Sanders, distinguished professor of real estate finance at George Mason University.

“Real median household income (has been declining) since peaking in 1999 and is now $5,000 lower or 9% lower,” Sanders says. “Average U.S. house prices are, on the other hand, 68.4% higher today than in December 1999.”

First-time homebuyers now account for just 27% — a record low — compared to the pre-crisis level of 40%.

U.S. Rep. Mark Takano, D-Calif., is among some concerned that the proliferation of REO-to-rental purchases could destabilize home prices and even affect rental rates. He’s asking the House Financial Services Committee to look hard at REO-to-rental deals and REO-to-rental securitizations.

Jed Kolko, chief economist with Trulia, said that while housing affordability will worsen in 2014 and home buying will decline, he doesn’t think the wave of institutional investors will have an effect on rental rates, even though it has definitely affected home prices.

But, he said, he doesn’t think the rise in home prices is primarily because of the influx of investors, but rather an effect of a big rebound — i.e. some markets dropped so much that even double digit gains have prices still below their recovery levels.

Using American Community Survey data from 2005 and 2012, Kolko looked at the change in metro housing units that were single-family rentals.

Most metros had a large increase in the share of their housing stock that was single-family rentals. Among the 100 largest metros, Kolko looked at the top 10 with the biggest increases in institutional investments (from one to ten) – Las Vegas, Nev.; Phoenix, Ariz.; Cape Coral-Fort Myers, Fla.; Memphis, Tenn.; Riverside-San Bernadino, Calif.; Tuscon, Ariz.; El Paso, Texas; Lakeland-Winter Haven, Fla.; Fresno, Calif., and Sarasota, Fla.

“Then, I compared the increase in single-family rental share with price and rent changes over the past year. Markets with larger increases in the single-family rental share had higher price and rent gains in the past year," Kolko said.

“However – and this is what I suspected when we first talked about this – there’s another factor: the severity of the housing bust. Harder-hit metros saw both a bigger increase in single-family rentals and higher price increases in the past year (due to the rebound effect),” Kolko said.

Adjusting for this, he said, is that markets with a bigger increase in single-family rentals had somewhat higher price increases over the past year but no statistically significant difference in rent increases.

The bottom line: the outsized and growing number of single-family rentals may be a serious indicator of an unhealthy housing market, but the impact it’s having on rental rates in general is nil, and at least part of the price appreciation the market has seen is as much a rebound effect as it is the impact of investor dollars pouring in and snatching up bargains.