A Sharp Downturn in the Art Market

As art became a serious business over the last few decades, with record multimillion-dollar sales eclipsing one another, it seemed as though values could just rise in perpetuity. But this year has been a reality check.

High-end art sales have slumped. Sellers have withdrawn prominent works from major auctions at the last minute, for fear of jeopardizing artists’ markets. More than a dozen galleries have closed in Manhattan. Layoffs have begun to creep through the $65 billion industry, as one of its largest companies, Christie’s, saw revenue plunge. It took in $2.1 billion from auctions in the first six months of this year, down from $4.1 billion during the same period in 2022.

In today’s newsletter, I’ll explore some reasons the art business has slowed, and how it’s affecting a rising generation of artists.

The high point

Jaws dropped on a November evening in 2022, when collectors bought a record $1.5 billion worth of paintings in a single night at the Christie’s auction house. Buyers snapped up a parade of masterpieces by artists including Vincent van Gogh, Paul Cézanne and Gustav Klimt — all from the collection of the Microsoft co-founder Paul G. Allen.

That frenzied night seemed to forecast a booming future for an industry that had been getting hotter by the year. But it actually marked the peak of the market.

High interest rates and inflation bear some responsibility for the slowdown. Collectors who view artworks as financial assets have flinched at the rising costs of doing business and the diminished ability to get favorable loans to buy paintings they hope will appreciate in value. The supply of modern masterpieces has also decreased as potential sellers sit on their investments until economic conditions improve for the ultrawealthy.