A new art market report by Bank of America suggests buying conditions are improving for collectors thanks to lower auction estimates, discounts at galleries, and interest rate cuts, among other factors.
Titled “Art Market Update Fall 2024: Opportunity Knocks?,” it says next week’s New York fall auctions and Art Basel Miami in early December can expect higher collector participation as a result.
“Bidder competition at auction has slowed, meaning buyers may be able to purchase works more affordably than in recent years,” the report says. “The anticipated favorable buying conditions come on the heels of lower-than-expected art sales in the secondary market during the first half of the year – with auction prices coming in only 1 percent above their aggregated mid-estimates, the smallest increase in seven-plus years.”
One category that has declined in recent years, and therefore presents opportunities for buyers, is the emerging artist market. Sotheby’s The Now sale of “wet paint” works, which regularly saw record-breaking bidding wars in 2022, has witnessed a 55 percent fall in sales totals since.
The report points to Colombian artist María Berrío’s La Cena (2012, mixed media collage on canvas) as an example. It sold for $1.5 million at Sotheby’s in 2022 before Christie’s offered the work again in 2024 for an estimate of $350,000 to $450,000. It sold for $441,000, marking a 71 percent decline in just two years.
However, on the flip side, the Latin American artist market is on the rise “as international collectors increasingly seek diverse and historically significant work,” the report says. Sotheby’s reported that sales of works by LatAm artists (both historical and contemporary) have risen by more than 50 percent above pre-pandemic years, topping $250 million between 2020 and 2023.
Dealers face a ‘critical choice’
“Art Market Update Fall 2024: Opportunity Knocks?” says the current market correction, which started last year in the wake of high inflation and interest rates – and global geopolitical unrest – “has spilled into 2024.”
“Less marquee estate property in the May sales potentially also dampened bidders’ confidence and enthusiasm. Fewer masterpiece works are being offered in what has widely been viewed as a ‘buyer’s market,’” it reads.
As Drew Watson, Bank of America’s head of art services, told ARTnews, these conditions give collectors the upper hand when negotiating with dealers.
“Heading into 2025, we see two themes emerging across the art market,” he said. “First, there is good news for buyers. The 2023 market correction carried over into this year, creating a favorable buying environment for collectors. As the primary market adjusts, galleries are tasked with navigating pricing inventory. Collectors now have more room to negotiate and secure favorable transaction terms.”
The report says that galleries “face a critical choice: adapt to the new market reality or risk accumulating unsold inventory.” “Collectors are more discerning than ever,” Watson continued. “They know that galleries continue to sell A+ works, but that terms are more negotiable on everything else. Collectors are using that knowledge to secure more favorable transaction terms: including skipping waitlists, eliminating resale restrictions and ‘buy one gift one,’ and of course, price discounts.”
Younger collectors and art as a wealth strategy
The second theme, Watson explained, is collectors increasingly incorporating their art holdings into their overall wealth strategy. “We expect interest to grow among younger generations too,” he said. “In fact, Bank of America Private Bank published a study this year showing 56 percent of collectors now consider their art as a part of their wealth management strategy, including 98 percent of younger collectors (millennials and Gen Z).”
“Art Market Update Fall 2024: Opportunity Knocks?” says the estimated value of art and collectibles is predicted to top $2.8 trillion by 2026 and comprise more than 10 percent of ultra-high-net-worth individuals’ portfolios.
How will Trump’s win impact the art market?
As the report explains, in the past two presidential election years, the fall marquee sales “contracted sharply,” so concern about next week’s auction “is understandable” given Donald Trump’s recent victory.
“Today’s market is already vulnerable, with auction totals in the first half of 2024 coming in at their lowest number since the pandemic shock of 2020,” the report explains. “Uncertainty on the direction of fiscal and monetary policies that may affect art transactions and collectors’ ability to move and pay for art could complicate things further. And while auction houses seem confident on the number of consignments coming to market this fall, some argue that the outcome of the election — including the potential for an indeterminate or disputed result — may distract or cause hesitancy on the side of the buyer. It may also bear on the willingness of savvy buyers and sellers to transact until the policies of a new administration are clear.”
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