Is the art market trying to tell us something? Is it good news not only for the art market but for the housing market as well, never mind the economy in general? Consider these results from this year’s auctions:
- In February, Sotheby’s “made history,” in the words of the New York Times, for the second week in a row with a London auction that brought in $84.5 million and the earlier one that had a journalist marveling at the market’s “dizzying heights;”
- In May, a Sotheby’s auction realizes $190 million, with only three lots failing to find takers, while a Christie’s auction is equally successful (though one in June was only modestly so);
- The sale of 142 works of art from the Lehman Brothers collection in September garners $12.3 million, around the high estimate;
- Crowds jostle to witness and participate in an auction this month at Phillips de Pury & Co., which achieves $137 million in sales in contrast to its previous record of $59 million on an evening;
- At the beginning of November, winning bids for 46 works of art total $227.5 million at Christie’s;
- A Sotheby’s auction of 54 works of art a week later beats high-pre-sale estimate of $215 million by $6.4 million;
- Then at the end of last week, a Christie’s sale of postwar and contemporary art falls between the company’s low and high estimates by reaching $236.9 million, with only five of 75 works failing to find buyers.
Writing in the New York Times, Souren Melikian referred to a “wave of optimism that swept across the auction scene. . . ” As she noted that Sotheby’s and Christie’s sold nearly half a billion dollars worth of paintings, drawings and sculptures this years. “Three astonishing world records were set with two paintings and one sculpture that would never have caused comparable excitement in the past,” she reported.
After the Lehman auction, a Sotheby’s executive was thrilled. Commented Tobias Meyer, director of the contemporary art department worldwide:
In this economy if a sale makes its top estimate, then it’s a great success.
A research firm in Britain, the Royal Institution of Chartered Surveyors (RICS), found that 26 percent more respondents (of 54 of its members who specialize in the art market) reported a rise in art and antique prices in the third quarter of the year than said prices were falling. RICS chief economist Simon Rubinsohn called the market “buoyant” as buyers invest in material assets during uncertain economist times.
The survey showed that prices have been rising for seven quarters in the world.
It cannot be irrelevant that the art market saw similar exuberance by the time the auction season ended in the fall of 2007, when the housing market outside New York City already was wavering and Manhattan’s was still hot. As the Wall Street Journal then reported:
The two chief auction houses, Sotheby’s and Christie’s International PLC, brought in about $1.67 billion combined over the past two weeks, up from $1.3 billion last November and $764 million the November before. At least 75 artist records were broken, and more than 258 works sold for $1 million or more. The twice-a-year sale of contemporary, modern and Impressionist art ends today with an estimated $66 million two-day sale by smaller auction house Phillips de Pury & Co.
It was not always thus.
An auction in May 2009, Christie’s did okay, with sales totaling $102.7 million, but that was only in the middle of its estimate. And Sotheby’s one night earlier was able to achieve only $61.3 million.
Last year, Times writer Carol Vogel described a Christie’s sale that began the fall auction season as “tepid,” saying the event went “unsteadily” as sales reached $65.6 million. A Corot landscape found a buyer for a low figure she called “laughable,” $866,500. And a Pissarro drew no response at all, going unsold.
But a Sotheby’s auction a few days later ended with the purchase of $181.7 million worth of art, well above the high estimate of $163 million. Not only were “spirited” buyers bidding from Europe and Asia, but Americans participated as well. Simon Shaw, head of the Impressionist and modern art department, described the results as a “real vote of confidence for the market.”
In May of this year, the trend continued as Sotheby’s hammered down $190 million worth of art. Vogel wrote then:
What made Sotheby’s Wednesday night sale so significant, though, is not simply the money spent on individual works. Each time a picture or a three-dimensional work considered to be desirable appeared on Sotheby’s turnstile, bids came in from every quarter, invariably involving many contenders. There were none of the histrionics in which bidders readily indulged in the days preceding the fall 2008 crisis. Throughout, the tempo of the sale was measured but sustained.
I’m cannot be certain what to make of these numbers, especially since they were mixed a year ago, but I believe three things: 1. That the art market has always seemed to me to reflect the health of the economy and the housing market in particular; 2. Manhattan is home to the most important art and financial centers of the world, and the two are inextricably entwined; and 3. One or two of anything, including art auctions, doesn’t necessarily reflect a trend.
Having spent only a couple of hours researching the relatively recent art market, I am persuaded of the reliability of Sotheby’s sales both last year and now this as harbingers of the housing market.
Just like the worldwide auction market, Manhattan’s first quarter in 2010 for the housing market was particularly robust relative to the doldrums that followed the combustion of Lehman Brothers.
Again, however, I cannot make a defensible case for my position. Art sales represent a combination of the quality of the art, the desire by investors for hard assets, the strength of currencies, especially the dollar, and perceptions about the local and global economies. It also is true that the art market reflects only wealthy consumers.
I could, in fact, make the opposite case–that the strength of the art market proves the weakness of the housing market.
Yet I’m sensing a glimmer of optimism for the first time in months. That’s because–in addition to my decidedly unscientific analysis of any correlation between the art and housing markets–the stock market has shown renewed strength based in part on the Fed’s recent decisions, em ployment statistics and company earnings reports. Also, Wall Street bonuses are expected to reach record highs.
Nor should we forget that real estate is a hard asset, just like art.
Could prices in New York City fall farther? Of course, they could, and some analysts are predicting that circumstance. Depending on the housing segment, I’d suggest there will be some uneven corrections to come. But it is hard for me to imagine anything like the double-digit declines that started to occur two years ago.
Is anyone with me on this?
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
M: 347-886-0248 begin_of_the_skype_highlighting 347-886-0248 end_of_the_skype_highlighting