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The key to the housing recovery is still investors

FORTUNE  — After witnessing one too many false starts in the recovery of America’s housing market, it’s hard not to be a little skeptical about what kind of recovery we should expect. Will it improve steadily, or experience choppy stops and starts?

One way to determine that is by looking at who is driving home sales: Is it investors buying up homes in bulk with hopes of turning a profit or individual buyers simply looking to live in the homes they purchase?

There isn’t an easy answer, but the Federal Reserve Bank of Atlanta recently looked into it. The topic is especially timely, given that Wall Streeters are increasingly turning foreclosed properties into rentals as an investment. Whereas in the past smaller investors typically played landlord, big investors such as private equity firm Blackstone Group (BX), are betting that the homes they buy today will turn decent profits years from now.

If investors drive the housing recovery, sales could eventually drop off once prices rise to a point where it’s not as worthwhile for them to buy. By contrast, we might see a longer and more sustainable rally if individual buyers dominate home sales.

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Both investors and typical buyers have signaled bigger appetites to buy. In September, sales of existing homes, which investors tend to flock to, rose by 11% to a seasonally adjusted annual rate of 4.75 million from a year earlier, according to the National Association of Realtors. And for seven months in a row, the median price for existing homes rose — it’s now $183,900, up 11.3% from the previous year. Sales of new homes, which generally attract individual buyers, have risen as well. The median price for a new house rose to $242,400 in September, 11.5% higher than a year earlier, the Commerce Department reported Thursday.

For now, it’s unclear who is driving the recovery. In the Southeast region, the Fed estimates that investors made up about 25% of home sales. This is roughly what others have estimated nationally, based on a survey of realtors called the Multiple Listing Survey. To be sure, though, the share is likely higher because the survey doesn’t reflect bulk sales to investors by banks or at auctions where there’s usually no realtor involved.

Nonetheless, investors’ part in the recovery has steadily risen. And if trends continue, they could surely dominate home sales. In 2011, single-family and condo sales sold to investors rose by 65.3% to 1.23 million properties nationwide, compared with 749,000 the previous year. That reflects 30% of existing home sales, according to California-based real estate investment firm Norada Real Estate Investments. Many of these sales have occurred in markets that were burned the most, says Marco Santarelli, a broker at Norada. That includes Miami, Phoenix, Las Vegas, Sacramento and Riverdale, CA.

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That’s similar to the way Fed analyst Jessica Dill sees it. In her look across the Southeast, the share of home sales to investors markedly dropped to 20% from 25% when Florida – among the states hardest hit from the housing crash – was excluded. This suggests investors may be driving the recovery especially in markets that saw the worst of the housing bust. If that continues, sales could eventually decline unless individual buyers are able to pick up where investors leave off. Not to say that would be less than a genuine recovery, but at the end of the day, investors can move the market only so far.

The rest will depend on consumers and a host of uncertain factors, from an improving jobs market to being able to qualify for a home loan.