New York hosted a largely successful blitz of Contemporary Art sales last week—and at least one predictor of art-world Armageddon.

On Friday, Andy Augenblick, president of Fine Art Capital, a unit of Emigrant Savings Bank and one of the nation’s most active lenders against art, predicted a sharp downturn in the market in coming months.

“There’s going to be a thinning of the herd,” said the former co-owner of real estate giant The Related Companies, explaining that he expects a number of art galleries to close.

Speaking at a panel on the economics of the art market at the Core Club, a private club for wealthy individuals and art collectors in Manhattan, Augenblick also predicted a “flight to quality”—that collectors would focus on artists that already had established global markets at the expense of emerging artists. He said that some collectors would soon be forced to sell due to financial pressures. And he is already seeing an uptick in art-related gift- and estate-tax fraud—people just “taking paintings down off the wall and giving them to heirs.”

The panel was occasioned by The Armory Fair, one of the largest art fairs in the country, which took place through Sunday—along with a record nine other art fairs showing emerging Contemporary Art.

If Augenblick’s bearishness bears out, it would have huge implications, since the art market has exploded in size in recent years. Auction and private sales at the two leading auction houses, Sotheby’s and Christie’s International—just a drop in the bucket of the global market—totaled $12.5 billion in 2007, nearly double the prior year.

At first glance, his remarks flew in the face of what several art dealers said were surprisingly strong sales at the fairs, especially in the current sour economic climate. Dozens of dealers successfully sold work, a handful selling out completely—although, by and large, the dealers who did well were either better-established or were selling work that was, relatively speaking, cheap.

“You didn’t see that many multimillion-dollar objects,” said David Ross, former director of the Whitney Museum of American Art and now an art dealer. “Last year there were more $3 million and $4 million pictures.” The art market has already “moderated,” he said.

Indeed, what sold tended to be more conservative, figurative works—faces and figures rather than swathes of abstract color. Plus, in something of a big sea change in taste that may presage Mr. Augenblick’s “flight to quality,” paintings and sculpture that consciously referenced Renaissance and Old Master styles were very popular. Israeli artist Yigal Ozeri’s paintings echo pre-Raphaelite damsels, Martin C. Herbst’s Parmigianino series salute the Italian master, Christian Vincent’s ballerinas offer Degas with a close-up, frantic, and hyperrealistic edge. All of the artists sold works at the Scope Art Fair adjacent to Lincoln Center, where activity, said dealer Mike Weiss, was “out of control.”

At the Volta Art Fair, three pieces by Irish artist Kevin Frances Gray, whose shrouded figures try to evoke the tomb sculptures of such artists as Bernini, sold for about $40,000. Champion cyclist Lance Armstrong bought artist Morgan Herrin’s $20,000 wooden sculpture  of a naked woman with a sword slaying a serpent. It mimics a classical Greek figure (if not for the octopus atop her face).

The Museum of Modern Art bought nine pieces by artist Jarbas Lopez from Brazilian gallery A Gentil Carioca for a modest $2,000 apiece, according to the gallery. (The museum declines to comment on such acquisitions.) Powerhouse British gallery Hauser & Wirth, which was purchased by Christie’s last year and is soon opening in New York, sold out its booth. David Zwirner sold several works by conceptual photographer Christopher Williams, whose work is, not coincidentally, included in MoMA’s current “Color Chart” exhibition.

And at least one noted artist and film director shares Augenblick’s dour perspective. John Waters, at a party at the Mandarin Oriental that the Armory Show threw Saturday, looked about the packed, brightly lit ballroom, with its floor-to-ceiling windows, and said: “This looks like The Poseidon Adventure.”