Everyone in the art market keeps one eye out on the real estate market. There are several good reasons to do so. Real estate developers are fairly over-represented among art collectors. Luxury real estate caters to the same class of clientele that contains many art buyers. And, real estate purchases are often the driving force in when art collectors become interested in starting to acquire works.

Last week, the Wall Street Journal made this interesting point. Much of the rental development in cities has been for the luxury market. Now rents are beginning to soften as new supply comes to market. That will have an effect on home and apartment buying. But the downturn in that end of the market may not signal a similar downturn in art buying. (Then, again, it may.)

Here’s part of what the Journal reported last week:

Now, though, the number of upscale apartments coming onto the market appear to be outpacing the number of renters able to move into them: More than 50,000 new units were rented by tenants in the fourth quarter in the U.S., six times the number in the year-earlier period. But that demand was overwhelmed by the 88,000 new units that were completed in the quarter, the most since the mid-1980s, according to MPF.

That gap looks set to widen in 2017. More than 378,000 new apartments are expected to be completed across the country this year, almost 35% more than the 20-year average, according to real estate tracker Axiometrics Inc.

Most of the new construction in recent years has been on the high end. Of 189,100 multifamily rental units completed between the fourth quarter of 2015 and the third quarter of 2016 in 54 U.S. metropolitan areas, 84% were in the luxury category, according to CoStar Group Inc., a real-estate research firm. The firm defines luxury buildings as those that command rents in the top 20% of the market.

Luxury Apartment Boom Looks Set to Fizzle in 2017  (WSJ)