Michael Plummer and Jeff Rabin, the principals in Artvest, the financing and consulting firm, wrote a tour de horizon of the art market over the last few years in The Art Newspaper. Puncturing some of the myths about art being uncorrelated to other assets or inflation hedges, they give this pocket history of the market from peak to trough:

This vulnerability becomes most apparent when comparing the two-week marathon of impressionist & modern and post war & contemporary auctions in New York in the autumn of 2007 with those from the autumn of 2008—$1.6bn against $729m respectively. The quality of material at auction was comparable; the only missing ingredient was buyer demand, resulting in a dramatic drop in prices and works sold. Lower auction prices combined with the loss of guarantees (inhibiting the owners of important works from selling at auction) further exacerbated the market contraction and the drop in prices. In autumn 2009, total auction sales were only $596m, or less than 40% of the peak […]

2010 will be a year of continued reshaping: auctions will remain smaller, private sales will be the preferred method of selling for the majority of collectors, the “best of the best” will garner significant interest and sell well, and second- and third-tier works will be left unsold or see further price reductions. It is no longer a time where a rising tide lifts all boats. However, should there be no significant new shocks to the global economy, the year ahead might just be better than the one behind.

Could the Art Market Be Undergoing a Fundamental Restructuring? (The Art Newspaper)