Cast Your Vote for Fine Art this Election Year

Americans just can’t escape the political headlines this election year. From highly-viewed televised debates to ongoing candidate gossip and surprise primary wins, the nation is on edge, waiting to see what happens next in the race for The White House. But what effect does the politically charged atmosphere have on the art market?

As a general rule, art prices fall during election years. The past four presidential election periods saw significant decreases, according to Artprice.com index. On the other hand, in 10 out of 14 recent non-presidential election years since 1998, art prices have risen.

This same phenomenon can be seen in regards to other assets. For example, in the real estate market, prices generally drop during election years. Although we are in an overall period of increasing property prices, house prices are estimated to increase by just 3% this year according to the Freddie Mac price index — a drop from 5% in 2014.

While the tendency for prices to drop makes things bleak for art sellers, it is great news for art buyers willing to take a gamble and buy during a period of uncertainty. The current market also seems to favor more modest transactions, making it a good time for young buyers to make their move. At art fairs such as Frieze New York, purchases of higher-priced works have been slower than in years past, but young galleries at Frieze did brisk business with works priced at around $15,000 or below. It is also worth noting that while impressionist and modern works are not moving much, contemporary art, particularly by women and minority artists, is doing well.

According to London-based dealer Offer Waterman, the current downturn does not mean a full stop. “The election is a big factor. People are waiting. But passionate collectors are still buying.”

Recent sales at Sotheby’s and Christie’s illustrate this trend. At a sale this month, a third of lots on offer at Sotheby’s went unsold with sales plunging 61% from a year earlier. However, at a sale at Christie’s just a few days later, 52 of the 60 offered lots found buyers; and most importantly, a horned devil’s head Untitled by Basquiat, considered a masterwork, brought in a staggering $57m. The international buyer was Yusaku Maezawa, a 40-year-old founder of a Japanese online retailer.

Some experts believe the fact that the art market is becoming more global is helping to keep it stable during election years. US politics is of importance, but increasingly, there is the sense that art is a portable commodity, so that events in one nation do not have complete power over the market.

However, there is no doubt that we are in a period of transition now and for most of 2016. By the end of the year, as people begin to get comfortable with the front-runners and then the winner, we will again see greater price stability.

So for those looking to take a risk and buy that key piece that may appreciate in value, now is the time to get out there and do it. While everyone else is reading election polls, you may just be taking a step towards your dream collection.

By Rayah Levy, Art Market Expert
LinkedIn, May 23, 2016:
https://lnkd.in/bjMbmB8