What do you make of the fact that all-cash home sales are at a record high even as institutional investor interest is dropping to its lowest level in two years?

Are families, as one tweeter (see Tweet below) put it, “shrewdly avoiding taking on usurious 4.21% 30-year mortgages?” (The lowest rate in 2014, by the way.)

RealtyTrac reported Thursday that the percentage of all-cash buyers has soared in the past year, with 42.7% of all U.S. residential property sales in the first quarter all-cash purchases, up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013.

Notably, this is the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011. Meanwhile, institutional investors are walking away from housing.

According to RealtyTrac’s report, institutional investors — entities that have purchased at least 10 properties in a calendar year — accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013 to the lowest level since the first quarter of 2012.

So who are these cash buyers?

“Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, vice president at RealtyTrac. “The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers — including individual investors, second-home buyers and even owner-occupant buyers — to fill the vacuum of demand left by institutional investors.”

So as the big boys pull out, the mom and pops, the home flippers, and the remoras scramble for whatever is leftover.

The effect of these smaller fish is evident in the home price appreciation in key markets.

“While the institutional investor purchase share declined in the first quarter in 18 of the top 20 markets for institutional investor share a year ago, home prices continued to appreciate in most of those markets, albeit at a slower pace in many cases,” Blomquist said. “There are a couple notable exceptions that could be cause for concern: Jacksonville, Fla., where the institutional investor share of purchases was down to 13.5% in the first quarter compared to 18% a year ago and where median home prices decreased 1% from a year ago in March after 15 consecutive months of annual increases; and Greensboro, N.C., where the institutional investor of purchases was down to 6.4% in the first quarter compared to 10% a year ago and where median home prices decreased 8% from a year ago in March following 14 of 16 months were median home prices increased annually.”

Investor diversity may be nice, but the sheer volume of investor purchases – be they institutional or bottom feeders – is a problem.

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.

As Clifford Rossi, finance professor at the University of Maryland’s Robert H. Smith School of Business, told Bloomberg Thursday, “The cash buyers today mean that all is not well in the housing market. First-time home buyers should make up 40% and we’re not seeing it because of mortgage rules.”

Looking at these trends – investors still pushing up prices, flat wage growth, the declining pool of qualified buyers, rising affordability gap, and the fact that mortgage credit availability continues to slip – this is not going to end well, or soon.