Why Shuttered Galleries Don't Mean the Art Bubble is Bursting

During the housing boom, the only thing rising faster than house prices was the number of realtors. Yes, a handful of superstar agents became fabulously wealthy and successful. But the median realtor was in many ways worse off than before the boom, just because there was so much more competition. Even high-end, well-respected realtors started to feel the pinch, not from the market turning, but from the way in which any potential buyer or seller was immediately beset by a piranha-like pack of agents all vying for the coveted 3%.

As it was in the housing market, so it is in the art market, where the number of competing galleries is rising almost as fast as art stars' auction prices. Which is why it's unsurprising to encounter anecdotes such as these, from Robert Goff:

In the last week Oliver Kamm gallery, a young and very high-quality Chelsea venue for emerging artists, announced that it would be closing. I spoke to Oliver at the NADA fair and he seemed to be in good spirits, with his legs kicked up on his table, playing a Gameboy. His solo exhibition of Kamrooz Aram drawings and collages was nearly sold out. But overall, he couldn't make enough money in his gallery to justify the expense and difficulty of managing a dozen artists' careers. Yesterday, Baerfaxt, an art world insider newsletter, announced that Emily Tsingou Gallery in London is closing its doors. Here's another very serious gallery, which has represented famous and now very expensive artists like Karen Kilimnik, tossing in the towel--and it's safe to assume it's not because they were making too much money.

Goff, however, considers these pieces of news to be a sign of a "market downturn" and a "correction". But they're not. Every bull market has its casualties: just think of how Netscape fared during the dot-com boom. Goff also notes that one painting he liked was still for sale at the NADA fair in Miami on Saturday afternoon, three whole days after the fair had opened. I'm sorry, but that really isn't a sign of weakeness in the market. It's just a sign that deals can still get done at art fairs after the first frantic 24 hours. I know that everybody's waiting for the art-market bubble to burst, but it hasn't happened yet.