The “go-go” years of the antiques trade in the 1980s relished the economy’s inflationary bias. The effect on prices for these objects was devastating, in a good way. Prices, like homes values prior to the present “Great Recession” had no where to go but up, up, up. As long as I can conceive of pricing in this industry, the possibility of a contraction was not only remote, but strictly limited to small segments that might go out of fashion. The comparison to real estate is uncomfortably similar.
Real property and antiques are tangible in a different manner than gold, jewelry, or stocks & bonds. Real estate and an 18th Century chair take up space and require care and maintenance; they don’t fit into a safe deposit box unless you want to pay rent to store it in a warehouse like Christie’s new facility outside of Manhattan. Of course that way you can deduct not having any aesthetic pleasure from its asset value on top of the storage rental! But the difference between real estate and antiques splits off when you think that you can’t overbuild antiques like houses.
Anyone who has been involved in the antiques market knows that this field and the art segment of the industry are different. The two sometime go in tandem, but the 1980’s saw a definite divergence when art and especially Impressionist art prices collapsed with the Japanese art investment bubble. That time period however, was pretty good for antiques and they were in fashion. But in my mind, it was the first time the industry had actually experienced a deflationary cycle. Prices in that art category fell for several years and even today its market demand has been commandeered by contemporary art.
Are we now seeing this in the antiques business? Prices are not what they were, period. The deflationary effect of oversupply and contracting demand is self evident. The present environment does still create record prices both from auctions and private transaction for many items, but as a broad based industry trend, even the red hot mid-20th Century decorative arts period has hit a bit of a wall.
Like real estate, antiques need an increase in demand to strengthen any form of market price support; we don’t and never did it with mortgages or sub-prime loans. Deflation in the pricing of antiques has become the new reality of the market. With interest rates skewed to the haves and have-nots, financing a purchase is not an option. The present state of affairs could be systemic, or just a short term casualty from the existing economy, perhaps even a long overdue price correction. In the end we are subject to the whim of the market, and if deflation is even on the minds of the Federal Reserve Board, they can take a glimpse at this market to see the possibility.