How do you value art during a cooling of the market? Amid its coverage of the recent sale of over 200 works from the collection of Miami art collector and patron, Rosa de la Cruz [Christie’s, New York, May 14], The Art Newspaper noted the art markets to be ‘in the middle of a recalibration.’ Indeed, the auction’s total of $34.4M, while comfortably within its $25.8M to $37.9M presale estimate, contrasts sharply to the $100m figure the collection was reported to be worth a decade prior (as noted in this Artnet article). Such moments this season have supported broader debate around whether landmark shifts demonstrate changing buyer tastes (including as part of generational wealth transfer) and the impact of socioeconomic forces. What remains clear is that the nuances and complexities of valuing art are deepened in a cooling market. Consistency amongst fluidity The ‘cooling’ of a market is generally understood as a decrease in buying activity, lower volumes of transactions, lower prices fetched, and is typically linked to broader economic downturns, shocks (i.e., pandemics or wars) changing tastes, and internal dynamics, such as the oversaturation of certain art categories. In times of inflation, tangible assets like art can become more attractive as a hedge against currency devaluation. Appreciating these multiple factors, and how they interact, is key to informed valuation. With a downturn in enthusiasm, collectors, investors and appraisers are required to take a more strategic approach. When prices drop or stabilize after a period of rapid growth, liquidity can become an issue. Collectors might hesitate to sell, waiting for a market rebound, while buyers may be more cautious in an attempt to seek lower-risk investments. In terms of valuations, there are some reliable constants. Provenance and a well-documented lineage may contribute to assurance over the artwork's authenticity and significance. The quality and condition of the artwork also continue their prime position, while works that resonate culturally or emotionally with collectors may similarly maintain value within market fluctuations. Evaluating the artist's market performance over time is crucial. Artists with a consistent track record of sales, critical acclaim, and representation by reputable galleries are likely to hold their value better during market downturns. Analyzing auction records, gallery sales, and the frequency of exhibitions provide insight into an artist’s market stability. During a cooling market, emerging artists or those without a substantial market history might well see more significant price fluctuations A closer look Leveraging an objective opinion on market dynamics is critical. As a data-driven company, Appraisal Bureau exclusively offers valuations and does not participate in sales or transactions, ensuring complete neutrality - an approach that demonstrates the vital need for a growing professionalism and financial infrastructure in the art markets. And finally, patience may well prove the most valuable asset in a cooling market. Sellers waiting for the right moment to list their artwork to avoid significant losses could well mitigate the risks associated with market volatility. Buyers may take advantage of lower prices and invest in high-quality pieces with the potential for long-term appreciation. |