A site for financial advisors summarizes the latest Mei Moses findings by suggesting that art returns are getting smaller, especially for works of recognized value. Using their sale pairings, Mei Moses have found that although the average price of sales tracked was  $518,910, “the median price was only $63,718.” And that “Sales for less than $50,000 provided mean returns of 7.48% with a standard deviation of 17.23%.” While “Sales between $500,000 and $1 million, in contrast, generated returns of 5.51% with a standard deviation of 10.93%.”

In other words, buyers took on greater risk to goose their returns from 5.5% to 7.5% which is hardly head-turning even in a low-interest-rate environment. Worse for art investors, reaching for return often backfired when works failed to sell:

Mei Moses also examined 1,487 repeat sales pairs for artworks that were offered but did not sell in 2011 and 2012. Although many of the price statistics between sold and unsold objects were similar, the firm notes that a key difference in the pre-sale price ranges.

“However when you come to the average expectation of the two owner groups (sold and unsold), we see that the works that did not sell had a mean return expectation three times that of the works that did sell,” the firm says in a recent report.  “Therefore on average setting a return expectation too high reduces the likelihood of a positive outcome for the owner of the art.  This is a fact that is replicated in our full database.”

How Do Art Returns Compare to S&P? (Advisor One)