The art boom is over. Which shouldn't be altogether shocking, since rapid growth of any market can't go on forever.
Speculative prices paid for works at various art auctions in recent years bordered on the ludicrous. The most recent auctions have been a roller-coaster ride, with more downs than ups. Many works have sold for far less than estimates, while others attracted no buyers.
Contemporary art has been particularly hard hit. Even the Japanese, who still have their eye on quality Impressionist and 20th-century master paintings, aren't shelling out as much money as they had in the not-so-distant past. After several years of aggressive auctions, bidders are cautious. No one wants to be rushed into an impulse purchase during a period of economic downturn and potential war.
"Over the past four years the greatest acceleration in the history of the art market took place, with contemporary art rising faster than anything else, so a correction was to be expected," said John Marion, chairman of the New York-based Sotheby's North America auction house. "Furthermore, during a recessionary period fewer works of art generally come on the market, because potential sellers perceive they aren't going to get a proper price."
At a recent Sotheby's auction, nearly six out of every 10 contemporary paintings and sculptures didn't sell. At a sale which included Impressionist works, prices paid were considerably lower than estimates, in some cases 25 percent below the levels of earlier this year.
That's not to say that quality will not sell, but that it's hard to predict. Many works of lesser-quality artists or lesser-quality works of good artists bought by novices in the past few years have little marketability.
You can still buy art for a few hundred dollars that will appreciate, but it's never a sure thing. There have been some big-buck successes, among them Willem de Kooning's "July," a 1956 abstract urban landscape painting which recently sold at a Christie's auction for $8.8 million, higher than the auction house's estimate. However, auction houses say they don't want to talk about art as investment anymore.
"We must kill the idea that art has anything to do with investment, for it is always stupid investors who get in and muck up the market with their speculation," declared Christopher Burge, president of the New York-based Christie's USA auction house. "Regarding the weak economy's effect, I find that the true collectors are thrilled, because they're going to have an opportunity to buy pictures at reasonable prices."
The art market never dies out altogether, but does move in cycles. That makes it important to do your homework, study art that you like and buy the best quality you can afford. You can only hope for the best in price appreciation, believing that your taste will be rewarded. It's "buyer's market" time.
"The last few years have been dangerous for collectors, but the hot air is out of the market and it's become a good time for collectors again," said Richard Gray, owner of the Richard Gray Gallery in Chicago.
"Newer collectors should stick with reliable, honest dealers and buy quality works, expecting a slow and steady increase in value based upon the rising reputation of the artist, not inflation of the market."