We’ve seen the art market plateau in 2014 and 2015, then pull back substantially in 2016. My most accounts, prices remain strong—as does demand—but it is supply that is constraining the market.
Artsy spoke to Don Thompson who offers a fairly unsophisticated reading. For him, a rising stock market creates a wealth effect that makes younger buyers more eager to spend on art. Somehow, too, the wealth effect will also convince sellers to part with their works.
Why they would be selling now but not in 2016, Thompson doesn’t say. (The chart above shows the gains of a gold ETF charted against the S&P 500. Both are up this year as the art market has contracted in volume, if not price.)
Thompson also doesn’t seem to be aware that the market has shifted toward the lower levels not because of rising equities but because the top of the market is fully priced.
In the secondary art market, supply is also created by identifying new groups of objects that are becoming valuable. And we see that with a number of artists’ markets.
That brings us to the most astute comment in the Artsy piece which comes from Todd Levin. Contra Thompson, Levin points out that the new administration’s hostile stance toward institutions like the NEA and NEH threaten to make it harder to identify new artists if smaller museums lose funding and the “cultural infrastructure collapses.”