Post by migston26 on Mar 27, 2009 16:11:06 GMT -8
Here's an entry from my blog that I thought might interest some of you. Mostly just rambling off the top of my head since I'm not an economist or an art appraiser.
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As a relative newcomer to the lowbrow art scene and a long time housing bubble watcher, I'm forced to ask the question....
Was there an art bubble and if so, has it popped?
Prior to the financial collapse, America was riding on the high horse. Everyone made easy money by flipping houses or using their homes as ATM machines with HELOCs and refinancing to Option-ARMs. People didn't have to worry about retirement because their houses were worth 5 times what they paid for them. The stock market was soaring to a record high of 14,000 points. People felt so well off and so secure that they didn't bother to save and the savings rate plummeted to below 1%.
It was in this environment that I was introduced to the lowbrow art scene. My first reaction was amazement that people were doing serious art that appealed to my quirky, pop culture, anime inspired sensibilities. My second reaction was shock over the prices people were willing to pay for them.
Anywhere from $100 to $2000 for a print!? Aren't these just glorified photo copies? ( I know better now, but that was my uninitiated first impression) Some prints were in such high demand that they required a lottery system where people had to draw numbers for the privilege to even pay those prices! Some would sell out in mere seconds! It was amazing and unbelievable, yet slowly I got sucked in.
Later I would look on Ebay and see the same prints that I had balked at for retail price and be staggered by the astronomical resale price. Suddenly, dropping $200 to $600 on a print didn't seem like such a bad idea if it would return you anywhere between $800-$2500. As a relative latecomer to the scene, I found myself only in the game for new releases because I was effectively priced out of anything more than a year old.
Meanwhile in the housing market, you've got a similar phenomena going on with the median house price costing 10-20 times the median salary. There was no way for a first time home buyer to break into the market without committing financial suicide because the flippers and the people trying to trade up had artificially inflated the prices so much. Unfortunately in housing, there is no equivalent to a retail release of a print from an artist.
We all know the result of the housing bubble and the inevitable collapse but what does this economy bode for the art scene? I'm not exactly sure since I'm no expert and there's a few extra factors to think about.
Firstly, art collecting at its core is a luxury purchase. People who are starving will not drop $10k on an original piece of art. So if times get tight and people start seeing their disposable income shrinking, it only makes logical sense that they would cut down on their art spending, right?
It might seem that way but the answer is complicated because art is also an investment.
When you look at the blood bath on Wall Street and the miniscule rates of return on interest bearing bank accounts, dumping your money into art begins to look like a sound investment. So one theory could be that proven artists with high demand will not be affected much but up and coming artists will suffer because of the uncertainty about whether or not their work will appreciate.
Another theory is that the people who buy art in the first place are well-off with steady incomes and work in professions that wouldn't be affected by the economy. So even though 10% of the country is unemployed, those 10% were not buying art anyway.
So who knows. I have no access to surveys or statistical data about art prices. My only barometer for art prices is watching the ebay auctions of my two favorite artists, Luke Chueh and Audrey Kawasaki. So take my anecdotal data with a grain of salt since this is admitedly a small sample size.
What I've found is that, like in the housing market, the get-rich-quick flippers have found themselves stuck with inventory that they can't move. I've seen numerous auctions for items that are still available for retail prices (like Luke's "Reach" and "Honey bear" which haven't sold out yet). Other more rare items have been relisted over and over with no apparent sale or price reduction in sight (Some Audrey originals and Luke's "The Darkness" for example).
So nobody knows how this is all going to pan out. What I do believe though is that like the housing market, the effect of the economy on the art scene will clean house. Flippers will slowly find that making a quick buck is not as easy as it used to be and begin exiting the market. The market will consist of people that truly want to buy a piece of art or their first house. Ultimately that's a good thing because the prices will be based on real demand instead of being artificially inflated by speculators.
---------------------------------
As a relative newcomer to the lowbrow art scene and a long time housing bubble watcher, I'm forced to ask the question....
Was there an art bubble and if so, has it popped?
Prior to the financial collapse, America was riding on the high horse. Everyone made easy money by flipping houses or using their homes as ATM machines with HELOCs and refinancing to Option-ARMs. People didn't have to worry about retirement because their houses were worth 5 times what they paid for them. The stock market was soaring to a record high of 14,000 points. People felt so well off and so secure that they didn't bother to save and the savings rate plummeted to below 1%.
It was in this environment that I was introduced to the lowbrow art scene. My first reaction was amazement that people were doing serious art that appealed to my quirky, pop culture, anime inspired sensibilities. My second reaction was shock over the prices people were willing to pay for them.
Anywhere from $100 to $2000 for a print!? Aren't these just glorified photo copies? ( I know better now, but that was my uninitiated first impression) Some prints were in such high demand that they required a lottery system where people had to draw numbers for the privilege to even pay those prices! Some would sell out in mere seconds! It was amazing and unbelievable, yet slowly I got sucked in.
Later I would look on Ebay and see the same prints that I had balked at for retail price and be staggered by the astronomical resale price. Suddenly, dropping $200 to $600 on a print didn't seem like such a bad idea if it would return you anywhere between $800-$2500. As a relative latecomer to the scene, I found myself only in the game for new releases because I was effectively priced out of anything more than a year old.
Meanwhile in the housing market, you've got a similar phenomena going on with the median house price costing 10-20 times the median salary. There was no way for a first time home buyer to break into the market without committing financial suicide because the flippers and the people trying to trade up had artificially inflated the prices so much. Unfortunately in housing, there is no equivalent to a retail release of a print from an artist.
We all know the result of the housing bubble and the inevitable collapse but what does this economy bode for the art scene? I'm not exactly sure since I'm no expert and there's a few extra factors to think about.
Firstly, art collecting at its core is a luxury purchase. People who are starving will not drop $10k on an original piece of art. So if times get tight and people start seeing their disposable income shrinking, it only makes logical sense that they would cut down on their art spending, right?
It might seem that way but the answer is complicated because art is also an investment.
When you look at the blood bath on Wall Street and the miniscule rates of return on interest bearing bank accounts, dumping your money into art begins to look like a sound investment. So one theory could be that proven artists with high demand will not be affected much but up and coming artists will suffer because of the uncertainty about whether or not their work will appreciate.
Another theory is that the people who buy art in the first place are well-off with steady incomes and work in professions that wouldn't be affected by the economy. So even though 10% of the country is unemployed, those 10% were not buying art anyway.
So who knows. I have no access to surveys or statistical data about art prices. My only barometer for art prices is watching the ebay auctions of my two favorite artists, Luke Chueh and Audrey Kawasaki. So take my anecdotal data with a grain of salt since this is admitedly a small sample size.
What I've found is that, like in the housing market, the get-rich-quick flippers have found themselves stuck with inventory that they can't move. I've seen numerous auctions for items that are still available for retail prices (like Luke's "Reach" and "Honey bear" which haven't sold out yet). Other more rare items have been relisted over and over with no apparent sale or price reduction in sight (Some Audrey originals and Luke's "The Darkness" for example).
So nobody knows how this is all going to pan out. What I do believe though is that like the housing market, the effect of the economy on the art scene will clean house. Flippers will slowly find that making a quick buck is not as easy as it used to be and begin exiting the market. The market will consist of people that truly want to buy a piece of art or their first house. Ultimately that's a good thing because the prices will be based on real demand instead of being artificially inflated by speculators.
