Editor’s Note: This story originally appeared in On Balance, the ARTnews newsletter about the art market and beyond. Sign up here to receive it every Wednesday.
With London and Paris auctions behind us, all eyes are on the New York evening sales—the final fall touchstone of the art market—which kick off November 7 with Christie’s 21st century evening sale, led by Cy Twombly’s Untitled (Bacchus 1st Version II), which carries an $18 million–25 million estimate. But the sales this year come amid a far different economy and auction market than last year.
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For even casual art market observers, the phrase “market correction” has been ubiquitous since at least this past spring’s New York sales, the market’s other major defining period. In May, Sotheby’s pulled five lots from their contemporary evening sale. The move, along with multiple bank failures and the much-talked-about end of the “cheap money” era , led some insiders to predict a correction to the market’s top end. Others noted that the previously white-hot ultra-contemporary market had noticeably cooled.
Even then, there were questions about whether the art market’s post-Covid bounce-back, which roughly tracked the frothiness around other alternative assets beginning in 2021, had begun to fade. Last year’s UBS Art Basel Report noted that public auctions generated $26.3 billion in 2021, a 47 percent increase over the previous year. Meanwhile, this year’s report (on 2022) noted a 2 percent decrease over 2021’s total. The auction houses seemed to quietly acknowledge the new climate, with one New York–based auction house chairman telling ARTnews in May that the major houses were being “sensibly aggressive” in negotiations with potential consignors, as they tried to draw strong works to the block.
It is, of course, difficult to directly compare one year to another, given how much the auction market seems to be at the mercy of large estates coming to market. Last year was no different, supercharged as it was by the Harry and Linda Macklowe collection, which famously came to auction, thanks to a bitter divorce and backed by a court order . That sale drew $922.2 million, making it the most valuable single-owner sale ever to be auctioned. That record was promptly broken in November by the Paul Allen sale, which drew $1.5 billion. And then there was the sale of Andy Warhol’s Shot Sage Blue Marilyn, which Larry Gagosian bought at Christie’s for $195 million , making it the most expensive work by a 20th-century artist ever to be sold at auction. There are marquee collections coming up for auction this year—for example, Emily Fisher Landau’s, with its pristine Picasso, at Sotheby’s—but on the global auction scale that’s comparing apples to Apple stock.
Those headline-grabbing results hid a wider shift among bidders, according to Drew Watson, head of art services with Bank of America Private Bank. “If you scratch beneath the surface last fall, and you looked at the evening sales, and especially the day sales, you can see that there was less depth of bidding than we had gotten used to,” Watson told ARTnews. “A lot of things were selling at the low estimate on the reserve, even as sell-through rates still looked okay.”
There are other indications of the market softening. Auction sales at the three main houses during London’s Frieze Week evening sales this year were down by 20 percent, with only 80 percent of the works sold, as opposed to last year, when there was reportedly “an air of reassurance in the middle market .” The slip in sales during Frieze week feels like a repeat of the June auctions in London, during which Christie’s saw most lots generate hammer prices near or below low estimates during its 20th and 21st century evening sale. This despite the assurances of Keith Gill, the house’s London head of Impressionist and modern art, who said the house’s strategy consisted of offering “the right works at the right estimates.” Last summer in London, Christie’s three-act evening sale achieved “ few records and fewer fireworks,” despite being bolstered by two paintings by Monet, one from his famous water lilies series, but still brought in £203.9 million. This year their total for the same London June sales was £63.8 million.
So, is the market “corrected” from the Covid boom? It’s hard to say. This year, the Federal Reserve has embarked on its most aggressive campaign of interest rate hikes since the 1980s, in an effort to curb inflation. While some have claimed such hikes have little effect on the ultra-rich, the rates have had a devastating effect on venture capital and the tech industry , among other sectors. It would be silly to suggest that collectors alone are immune. The obvious other data point being the exploding Covid art market in 2021, when interest rates hit their all-time low. One doesn’t get wealthy enough to spend millions on a painting by ignoring macroeconomics.
The reality is this: the market fluctuates, often dramatically. In 2017, the UBS Art Basel Report found that the auction market in 2016 had tanked 26 percent from 2015. The following year, it jumped 27 percent. The year 2019 saw a 17 percent drop from the previous year and 2020 was a 30 percent decline from 2019. And, of course, all that was sorted by 47 percent jump in 2021.
The market dips and bounces back, as Josh Baer noted in a recent episode of the BaerFaxt podcast. “There’s always a new group coming in supporting the market,” Baer said. “Somebody will step into the fray and some people will move on. Nothing is new.” At the end of the day, with collectors, he added, what it really comes down to is “what’s going on with the stuff I collect.”