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11/17/2008: "Art Market Past and Present"

If you believe that art auction results are the be all and end all of the art market and that art auction results tell the full story of the evolution of art prices then you should probably reconsider your point of view. What art auction results do reflect is an extremely narrow view of how art market participants are reacting to the various influences that affect what price people are willing to pay for a work of art at a very specific moment in time. Looking at the sale history of an artwork over a period of one or two years or for that matter even five years may not give enough information to be able to truly appreciate how the value of that artwork has evolved.



It is difficult to make sense of what is happening when so many different points of view are being expressed by various experts and the media but when one puts things into perspective the figures speak for themselves. As an example of what I am talking about I will use the recent sale of the work “Untitled” (1992) by Albert Oehlen at the Sotheby’s Contemporary Art Day auction on the 12th of November (2008). The estimate for this work was USD $250,000 - $300,000 however it sold for $200,000 (hammer price) which doesn’t appear to be a particularly good result but the full story of this work paints a different picture. First of all, lets look at the sale history of similar works. In June 2002 another “Untitled” work painting in 1989 by Oehlen of a similar size sold for USD $17,322 (hammer price) with several other similar works selling for around the same price. To put this into perspective, if someone had purchased “Untitled” (1992) at auction in 2001 for USD $17,322 (hammer price) and then sold the work for USD $200,000 (hammer price) at the November 12 2008 auction that person would have received an increase of around 860% (taking fees into consideration) on their initial investment which, regardless of the fact that the work sold for $50,000 under the estimate at Sotheby’s on November 12, is an extremely good return. The purpose of this example is to show that the performance of a work of art cannot be determined from one auction results but needs to be assessed using data from a period of at least 10 years.

Another work by Oehlen, “Untitled” (1990), was also sold at the same sale as the above mentioned “Untitled” (1992) but with an estimate of USD $200,000 - $300,000 which was a $50,000 wider estimate than the USD $250,000 - $300,000 estimate for “Untitled” (1990). Although they both sold for the same price and had the same upper estimate the different lower estimate resulted in the sale of one work looking better than the other work. The perceived performance of these works of art have been manipulated by the auction house which once again shows how important it is to look at the big picture. The wider estimate of “Untitled” (1990) may reflect nothing more than the auction house having difficulty determining what the estimate should be and may not have been done to purposely affect people’s perception of the work but never the less the actions of the auction house did in this instance have the potential to alter the way people viewed the sale results and, consequently, the value of the works.

Am I optimistic about the future of the art market? Yes I am, because there are plenty of signs that people have confidence in the art market and have not lost their nerve. One such sign is the strong results being achieved for contemporary art which has been particularly evident with the November auctions as seen in the table below. The table from chelseaartgalleries.com shows the most successful lots from the November 14 Phillips De Pury Contemporary Art Part II auction. It is important to note that the prices in the table are exceptional and are not representative of the whole market for contemporary art but what they do show is that there is still plenty of confidence in the work of contemporary artists. There has definitely been a reduction in the average price people are willing to pay for many contemporary works but that doesn’t mean that the prices being paid aren’t still good in the overall scheme of things as I have shown in the earlier example of the Albert Oehlen works. The relatively strong market for top works of contemporary art reflects the continued confidence in the work of contemporary artists whose work would usually be expected to be the most seriously affected because of the higher risk involved in purchasing such works. Regardless of what people were paying for works of contemporary art six months ago the prices being paid in this first phase of the art market correction represent an art market that is exceeding expectations on many levels and is still showing strength and resilience in a time of financial distress and uncertainty.

Best performers from November 14 Phillips De Pury Contemporary Art Part II auction:
1 Jin Meyerson Lot: 456 $40,000 - $60,000 $200,000 3.33 times high estimate
2 Steven Charles Lot: 243 $8,000 - $12,000 $32,000 2.67 times high estimate
3 Jack Goldstein Lot: 329 $35,000 - $45,000 $90,000 2.00 times high estimate
4 Eric Freeman Lot: 449 $7,000 - $9,000 $16,000 1.78 times high estimate
5 Beatriz Milhazes Lot: 105 $150,000 - $200,000 $310,000 1.55 times high estimate
6 Yayoi Kusama Lot: 260 $12,000 - $18,000 $26,000 1.44 times high estimate
7 George Baselitz Lot: 346 $15,000 - $20,000 $28,000 1.40 times high estimate
8 Nasser Azam Lot: 120 $150,000 - $200,000 $275,000 1.38 times high estimate

Replies: 15 Comments

on Monday, December 15th, Art Gallery Dubai said

Only rich painting collectors are the ones that can participate in art auction. For those who doesn't have the power, money and know nothing about paintings, they could not participate on this neither they would enjoy even the idea of why others are crazy about this.

on Thursday, November 27th, Fashion Jewelry said

As collectors we buy what we love and ignore the auction records (when they even exist, which is rare). When possible, we create a relationship with the artist and have completed many successful collaborations. That is where we find meaning, not in artificial auction records. As creators of art, we create many different types of glass and fashion jewelry - mass market and spectacular one-of-a-kinds works. Do we hope that someday, someone will over pay for one of our pieces at an auction or sing our praises in a book? Of course, but that is not what propels us forward. The appreciation of our clients and the relationships we have been fortunate to create through our own art - that is what pushes us forward (even during these tough times).

on Tuesday, November 25th, josé said

Mike, I just read an article recently where it was stated that at the top level art prices and investment in art was not being significantly hit by the recession.

Folks, I don't like to view art as merely an investment but I cannot rule out that many do - it is not the reason I paint yet I continue to believe that art is a great investment and work towards that... even if it is simply a flicker of hope in a recess of my mind, as Olga said, it's a pleasure to have that dream.

As I keep reminding my wife and daughters you'll never get rich if you keep knocking the rich, you'll never achieve success if you are weary of the success of others - because in so doing you close within yourself the door to your own richness and your place in the sun. Such a mindset only serves to keep you in a state of deficit, and is ultimately a condition of your own choosing which you perpetuate throught this type of discourse so as to validate your belief. It won't take you very far.

Sorry if this sounds syrrupy folks, I might get disheartened sometimes but i still hold on to that dream.

on Monday, November 24th, wall art said

Hi, a factor that also has to be considered is the state of the economy. As we continue further into the current reccession climate auction prices will fall but does this represent a long term shift in demand? No, you have to look at the underlying consensus and oppinions towards art as opposed to price trends.

Thanks

Mike

on Monday, November 24th, busby seo test said

What is art auction all about?

on Friday, November 21st, Zohaib said

intresting article !

love to read it !

on Thursday, November 20th, bm said

Andrew says it well:"Who history and the market applauds are those who keep themselves on the auction block and in the newspapers. They can claim to be important, because to most people, they are."

Mark is correct in saying that "These auctions are of a world of their own." However, those that let them have the power are not necessarily misguided as you state Mark.

on Wednesday, November 19th, Olga said

:). Actually, I am thankful to Nicholas - he gave a brief report on something that's going on in art auctions. It's always good to be informed. Looking at the prices, it's a pleasure to have a dream:)
As for Mark's "when one who earns their money for a living by hard work, buy my paintings, then I know that they realy apreciate it for what it truly is" - I totally agree.

on Wednesday, November 19th, Mark said

Only a few of the population (artist and non-artists) pay mind to the auctions, the general buying public (art buying public) pay it little mind. This has been my experiance. Again because even the average art buyer is not in league with the rich who attend these auctions of unreality. If not drawn to my attention in this blog I would not have known about the auction Nicholas speakes to because it has no baring on me and what I sell, or in fact for what most of us here sell. Andrew, I disagree that those of us in the trenches do not make up the art market, we do, along with sellers and buyers. Perhaps there are two art markets; the real one and the nether one. Let the rich buy what they may as they are fools for doing so (yes of course if one of the rich wanted to buy my work I would sell it to them in a heart beat) but I am more pleased when one who earns thier money for a living by hard work, buy my paintings, then I know that they realy apreciate it for what it truly is.

These auctions are of a world thier own, and still have no hold on the real art market. Those who let them have the power are misguided.

on Wednesday, November 19th, Andrew said

Mark, auction results and news are what make up most of what mankind believes about art. As such, it's not them that live in an unreal nether world, but most artists. Those in the trenches, like foot soldiers whose lives depend on decisions not their own, do not make up the art market, either, rather, those buying the art, and those adept at selling it. This says nothing about quality, however, just eat a big mac and you'll see that what sells best is clearly not quality. In the words of Bertrand Russel,
"The fact that an opinion is widely held is no evidence that it is not utterly absurd; indeed in view of the silliness of the vast majority of mankind, a widespread belief is more likely to be foolish than sensible."
Who history and the market applauds are those who keep themselves on the auction block and in the newspapers. They can claim to be important, because to most people, they are.

on Wednesday, November 19th, Mark said

I find the auctions niether encouraging or discouraging as they are not related to reality, they are in that nether world the very rich live in.
Andrew, I never sugested that those of us in the trenches are the 'worst off' in fact quite to the contrary. Many an artist may do well in thier life but be forgotten when they are gone. I suspect each of us here, no matter how well we may do will be forgotten. The health of the art market is not determined by these auctions as they have no affect on my work or how well it sells, hence the art market being made up primarily by those in the trenches (not the worst off) is best determined by those in the trenches.

on Tuesday, November 18th, andrew said

Art auctions have always been a primary source for the manipulation of the value of paintings. But Mark, I disagree that the best way to guage the health of the art market is to see how the worst off, the ones in the trenches, are doing. This is work that will almost all fall under the dust of history anyway, and almost never becomes what we use today to judge the cultural level of any past society.
It's relieving to know that most of what sells today for these astronomical prices will be forgotten too. I never heard of any of these people except for George Baselitz anyway, though I must admit, I don't have room in my head for more than a few hundred artists whose work I admire.
I saw the Menil collection in Houston yesterday. I was struck by how poorly the newer acquisitions, bought after the Menils' deaths, fit in with the rest of the work. Certainly some were acquired at auction...and I wonder if those curators or consultants who purchased them for the museum made a percent off what they bought. Most likely. That too will influence how much money is spent, and guess what, if an entire group of museums all buy the same artist's work, they validate each others' choices and secure their curators' jobs. Yep, a lot more than just the quality of the work in this mix.

on Tuesday, November 18th, Ellen said

It's always nice to dream..... I read these incredible auction prices and am encouraged!

on Tuesday, November 18th, Mark said

Art auchtions may be fine to gage how the highest level of art is going (but not realy), but for those of us in the trenches it means nothing. Auchtions are actualy a distortion and have no relation to the real world. Only the very rich participate in an activity which is more of a 'see what I got' sport then actual art collecting. Most of the people at these auchtions are wearing cloths that cost more then one of my most expensive works. My point is that to use these as a way of telling the health of the martket is like saying, 'Well the rich are doing well, so the economy must be doing well too.' It doesn't square. The best way to gage the art market is to see how the average artist, the ones who don't make millions or hundreds of thousands of dollars off their art, see what they are doing and how well. I think we would have a more realist view of the art market.

on Monday, November 17th, Arcadia Fashion said

Very true. Replicas, reprints, usage royalties, etc also influence an artwork's value.