The Art Market

In my posts over the past few days I have mentioned how interesting the fall art sales are going to be given the state of the economy and also with some of the signs of slippage in the art market based upon the July Mei/Moses All World Art Index. ArtInfo is also thinking along those same lines and asked three art advisors what they believe lies ahead in the short term art makret. There appears to be less concern over a large decline due to it being late in the consignment period, available and positive credit terms, and quality art works still available. Overall there are many unknowns and uncertainly about what will happen in the art market place in particular and the overall economy in general. That being said, and as a Christie's rep told ArtInfo, they are cautiously optimistic (although what do you expect them to say in a public statement). By the way, I am attending the ASA Conference in Washington DC. For the general session, local economist and college professor Stephen Fuller discussed the US economy. What I got out of his talk was there are some signs of growth in many underlying economic indexes, but none are really strong enough to instill confidence or growth in the short term. Art Info reports

IT'S LATE IN THE CONSIGNMENT PERIOD
The process of acquiring consignments began just after the spring sales, so the auction houses are already deep into their acquisition process and probably have about two-thirds of their inventory for fall already, according to Levin.

CREDIT HASN'T BEEN CRUNCHED THE WAY IT WAS IN 2008

Schwartzman postulated that the lower prices the art market saw in late 2008 and 2009 were probably a result of the lack of available credit after the collapse of the housing bubble. Lack of credit means lack of cash on hand, which means less money changing hands. But interest rates are low and there still seems to be cash in the market.

COLLECTORS HAVE BEEN ACTIVE THIS SUMMER


No matter what is going on in the larger world, the art market is fueled by the willingness of buyers and sellers to make transactions. Until supply or demand dries up, the art market will keep chugging along. "I don't feel any hesitation from my clients at all," said Schiff. Schwartzman echoed her sentiment, saying that he has a number of clients in the process of acquiring high-quality work. "For me this is an especially active August," he said.

THE ART MARKET HAS ITS OWN CYCLES, BUT IS NOT UNCONNECTED TO WORLD EVENTS

The art market might not be affected by a downturn — it may even get a boost from falling equities as people look to diversify their portfolios — but it can't survive a market collapse. Levin recalls the late 1980s, when a bouyant Japanese market pushed art prices to dizzying heights. Exports from auction were about $607 million in 1990, the year that Ryoei Saito bought Vincent van Gogh's "Portrait of Dr. Gachet" for a record $82 million and Pierre-Auguste Renoir's "Moulin de la Galette" for $78 million. Just a year later exports were 5000 percent less (yes, 5000 percent), down to $12 million after the bubble burst. "There is no doubt that what happens in the broader market indices is going to have an effect on the art market," noted Levin.

NO ONE KNOWS WHERE THE MARKET IS GOING YET

The week's crazy equities trading could signal a slight correction or a major shift, but in the short term it is a wait-and-see game. There is no reason to panic because of the numbers after a few trading days, according to Levin. "If you haven't lived through a couple of booms and a couple of busts, you don't understand how to sit in the middle of confusion," he said.