For clients interested in purchasing art, now may be the time.
Lower auction estimates, discounts at galleries and recent interest rate cuts are spurring more art collectors to participate in marquee events, including the New York fall auctions and Art Basel Miami. That’s according to a newly released Bank of America art market update, which reports that the expected favorable buying conditions this fall follow lower-than-expected art sales in the secondary market during the first half of 2024.
Auction prices had their smallest increase in more than seven years, coming in just 1% over their aggregated mid-estimates. The art market correction started in 2023, with collectors affected by global unrest, high inflation and high interest rates, and has continued into 2024.
Additionally, a reduced amount of marquee estate property in May sales may have dampened bidders’ enthusiasm. At marquee auctions that month, 32% of lots sold went for less than their low estimates, the highest percentage since Covid disrupted the 2020 spring sale schedule. Also in May, resold lots generated an average annual return of only 4.6%, the lowest return in at least five sale seasons.
Bank of America reports that in the current buyer’s market, fewer masterpieces are being offered. Galleries must adapt to the new market reality or risk piling up unsold inventory, the update warns. “Collectors are more discerning than ever,” said Drew Watson, Head of Art Services at Bank of America Private Bank. “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.”
While bidding competition has cooled and auction prices have softened in some market areas, collector interest is strong in certain categories. That includes the Latin American (LATAM) and Latin diaspora artists market, where interest is expected to continue in 2025. This sector’s sales have risen 18% year over year and appear likely to continue strong, based on recent market activity and institutional support.
“Latin American artists have seen strong buyer interest and sell-through rates so far this year,” Watson said. “We saw multiple record-breaking auction sales in the spring, and biennales and art fairs have become key primary market platforms.”
The value of art and collectibles is expected to surpass $2.8 trillion in 2026 and make up approximately 11% of the portfolios of ultra-high-net-worth individuals, according to the update, which notes that collectors are shifting their outlook on art and increasingly view it an asset that is a component of their wealth management strategy. Interest will grow in the coming years as younger generations build and inherit wealth, Bank of America predicts.
