Hey, do you feel like the art world is upside down? In her disco standard “Upside Down,” Diana Ross sings about how her boyfriend is unfaithful, but she looks the other way because “no one makes me feel like you do.” Unlike Diana, I’m not comfortable when things are upside down, and I never look the other way. New year, new beginning, time to think about what doesn’t make sense. Here are just a few of the sundry art-market realities that just don’t add up.
The first thing that comes to mind is an inversion of the spread between the primary and secondary markets. Throughout most of the last decade, a collector could buy “primary,” i.e. fresh-from-the-studio-to-the-gallery, artworks by name-brand artists at attractive prices. Up until 2009, you could buy them for a dollar and then theoretically sell them at auction for two, or three or more (adding a few zeros). This practice became known as the much-maligned “flipping” of art. The better dealers tried to avoid selling to “flippers” out of fear that an artist’s market could collapse, but with secondary market prices spiking, there was ample opportunity for spectacular profit-taking, and we witnessed plenty of it.
Today I find the opposite to be true: very often, when you buy a brand new piece in a gallery, my view is that it’s worth half the moment you walk out the door. Yet still most collectors today buying primary works mistakenly think that they’re getting in on good deals, fantasizing that the new work they are buying is worth what they paid for it or more on the secondary market. Go talk to an auction expert, and you will quickly find out that today this is rarely the case. I understand people love to gamble, but eventually, when collectors figure out that the flipping game is mostly over, they will stop betting on the new and gravitate toward artists who have already stood the market’s test of time, or they’ll finally see the logic in revisiting critically and curatorially proven artists who have not yet had their day in the marketplace. Soon we will see a shift in values; the old stuff will hold its value but much of the newest work will suffer.
You say there are still opportunities in the primary market? Sure, I know of a desirable Sterling Ruby painting bought yesterday for $200,000 that someone is trying to flip for $500,000, and a lovely Tauba Auerbach picture that was $120,000 on the primary market late last year that was recently offered to me for $450,000. Wade Guyton’s work is another prime flip today, but even these will eventually lose momentum and the spreads will inevitably narrow. Mark Grotjahn paintings, which have extremely broad appeal, seem to be the ultimate exception to my rule—their value keeps going up no matter what. In his case I say, ‘exceptio probat regulam in casibus non exceptis’: the exception proves the rule. This year, allowing for such exceptions, the new hot stuff will lose steam in favor of more historical work. It will no longer be fashionable to have an entire house filled with brand spanking new art. In fact, a collection like that will seem plain embarrassing. When the shiny new stuff hits the resale market, it’ll sell like used cars.
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