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There's Volumes, and Then There's Values: Recapping 2023 Auction House and Collectible Market Performance

There's Volumes, and Then There's Values: Recapping 2023 Auction House and Collectible Market Performance
January 11, 2024
By 
Dylan Dittrich, Bradley Calleja
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Though none of the major auction houses remain publicly traded, the turn of the year attracts auction house press releases to the wire, lauding the sales volume achievements of the last 12 months...whether it was a year for the ages or not.

The lack of filing requirements means they share what they wish, perhaps telling the story as best suits them, but even so, the habitual sharing is somewhat of an oddity given it's not a necessity. Alas, the chest-thumping in good years necessitates the tamer whispers in more modest ones, and the transparency is appreciated regardless. 2023 was indeed one of those "more modest ones" at most houses, but the press releases arrive all the same. Now, to make sense of them.

In mid-December, Sotheby's projected that it would tally $8 billion in total sales in 2023, in line with 2022's result and above 2021's $7.3 billion total. However, the announcement was more vague than in years' past, with no distinction between public and private sales and little additional detail provided. In volume terms, the house saw a 30% year-over-year decline in the pivotal spring New York art auction season, but it made amends in the fall, delivering 28% year-over-year growth. Those two weeks alone account for nearly $2 billion of the annual volume, though they trailed last year's total from the same weeks by roughly 5%.

Christie's was more forthcoming despite a Paul Allen Collection-sized hole in its results in 2023. The house projected a sales total of $6.2 billion, which was down 25% from 2022. If you exclude the impact of Allen - which you probably wouldn't be inclined to do, as the absence of Allen would have surely necessitated the pursuit of other consignments - the year-over-year delta was -7%. The additional reference point is helpful, and the organic impact is somewhere in the middle.

Private sales accounted for 20% of the Christie's total, increasing by 5% from 2022 to reach $1.1 billion. In 2022, private sales accounted for just 14% of total sales, and the growth in 2023 represents a significant mix shift in the face of declining auction volumes. The top lot of 2023 at the house came via private sale.

Rounding out the three art-dominated auction houses, Phillips told ArtNews that it achieved $840.7 million in auction sales in 2023, down 15% from 2022. The house declined to provide additional information or details on private sales. Private sales had increased 20% in 2022 to approximately $250 million from $208 million the prior year - the omission of further information in 2023 perhaps nods to the absence of growth. Despite market share gains in luxury, particularly watches, the overall decline in auction sales comes as little surprise; the house's spring art auction sales in New York were down a mammoth 58% from 2022.

While results from the major art houses didn't re-write the record books at the topline, 2023 was a prosperous year elsewhere. Bonham's notched $1.14 billion in sales, the highest in the house's 230-year history, surpassing a 2022 total that narrowly eclipsed $1 billion. The increase in sales volume came at the high-end. 62 lots sold for over $1 million in 2023, nearly doubling the 33 lots from 2022.

The very most expensive lots were unprecedented in their magnitude. Bonham's sold a 1967 Ferrari 412P Berlinetta for $30.3 million - only slightly less than the prior year's top ten lots combined. There was depth as well: the 10th most expensive lot of 2023 was still 84% more expensive than the 10th most expensive lot of 2022.

Heritage Auctions also reported a record high at $1.76 billion in total sales, marking the third consecutive year in which the house has elevated its record tally. Many readers may know Heritage for sports or comic books, but coins remain the house behemoth. U.S. and World & Ancient Coins accounted for $368.6 million, while private sales in the category were said to increase. A look at the past auction archive on the Heritage site suggests Signature & Showcase auction sales were down 9% year-over-year in the category.

A similar look at the Sports category nods to a mid-teens percentage decline in public Signature & Showcase auction sales. Our soon-to-be-released Q4 & 2023 Sports Collectibles Market Report suggests that might actually be among the more resilient results in the category. Elsewhere at Heritage, Entertainment provided a boost with a record $39 million year.

Finally, there are demographic matters to consider. Baby Boomers are surely tired of the callous fixation on their age as it pertains to a looming wealth transfer. That must get old - thanks for taking it all in stride, Boomers! The reality remains: auction houses must reach new and younger bidders, but only two houses revealed details about their 2023 successes.

Christie's noted that 35% of total clients were new buyers, with a "growing participation of Millennials and Gen Z." That 35% figure is on par with last year (stated as "35% of all buyers" in 2022), though Christie's also reported in 2022 that 34% of those new buyers were millennials. Perhaps the absence of such a figure this year is significant, perhaps not.

Bonham's reported that buyer registrations increased 31% in 2023, a deceleration from 57% in 2022 but robust nonetheless. However, it also reported "unprecedented growth" in Gen-Z and Millennial buying activity, with their acquisitions up 147%. Last year, Sotheby's had noted 40% of buyers were new to the house, and a record number of those new bidders were under 40 years old. No such commentary this year.

Whether a focus of corporate communications or not, demographic shifts towards younger generations will remain a priority in 2024 and beyond as auction houses build a foundation for future prosperity.

While select houses appear to have beaten the odds to deliver growing volumes in 2023, there was mounting evidence of collecting markets on softer footing, and that's just in terms of sales volumes. Even in a softer year, though, just five auction houses saw collectors spend nearly $18 billion. But volumes and values, though related, are not one and the same, often fluctuating independently. Let's turn down the volume and shift our attention to that independent fluctuation in values.

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In 2022, collectors and investors endured a complex landscape in the world of both traditional and alternative assets. The year was marked by a significant downturn across major stock indices, which, in turn, provided the collector class with a rationale for the diminishing values of their alternative assets.

The S&P 500, a bellwether of U.S. equities, had slipped 18% and the tech-centric Nasdaq Composite tumbled 33%. Even Bitcoin suffered, as 2022 closed as the cryptocurrency's second-worst year on record with a 65% decline in price. Meanwhile, the art market, buoyed by a billion-dollar collection, delivered a record-breaking year, and fine wine and rare whisky outperformed volatile equities.

Despite a year that was filled with record sales, there were signs of weakness, as newly hot markets for sports cards and NFTs retraced below 2021 prices, and a valuation and volume decline started within the wine and whisky industry in the final quarter, setting the table for a challenging year ahead.

In 2023, traditional markets experienced a resounding recovery, while collectible markets suffered a continued decline that spread across nearly every sector. The S&P 500 gained 24% and a resurgence within tech rallied the Nasdaq to a 55% gain, good for its best annual performance in the 21st century. Those returns were paltry compared to Bitcoin's 154% bounce and Ethereum's 91% increase.

Even gold - yes, still relevant in this modern age - produced a breakout year and closed 2023 in record territory.

Meanwhile, the CL50, an index from CardLadder that tracks sports and trading cards, fell 8.6% in 2023 after dropping 22.5% in 2022. Between 2019-2021, the index had soared 337%, peaking in March 2021. The index, which contains a range of cardboard including a 1952 Topps Mickey Mantle rookie, a 1933 Goudey Babe Ruth, and a First Edition Charizard, is now down more than 60% from its 1Q21 highs.

The top of the whisky market came during the Summer of 2022. At its highest point, the Icon 100, the primary index tracked by Rare Whisky 101, had gained more than 400% from its 2013 inception. Between May 2022 and November 2023, the Icon 100 has dropped 22%. It’s not all bad news for whisky collectors and investors though. The market is surging in new regions, with six of the top 10 export locations for Scotch whisky found in Asia, as the continent now represents a $7.5 billion slice of the overall whisky market. While the value of Scotch whisky exports into the United States fell in 2023, they increased by more than 50% in Singapore, 20% in Taiwan, and nearly 40% in China.

In the world of fine wine, valuations have also soured. After a record-breaking run for bubbly which led to the Liv-Ex Champagne 50 Index doubling in value between 2020-2022, the market has seemingly gone flat, with the index falling more than 18% in one year. Burgundy, the hottest red wine region of the 2020s, also experienced a dip with the Burgundy 150 stumbling -16% year-over-year. In their 2023 market report, Liv-Ex emphasized data that indicates a continued flight from quantity towards quality, as the number of individual wines traded through the site has declined but activity involving leading vintages found within their Power 100 remains steady.

For those who track Rolex prices, you’re well aware of how that market is faring. The Rolex market is nearing 20 months of decline with prices down by around 30% across actively traded models. Much like sports cards and whisky, the speculation within the luxury watch market was unsustainable. Waiting lists were measured in years, while new Daytona releases were retailing for less than $15,000 but selling on secondary markets for nearly $30,000.

The recent decline in valuations has also correlated with an increase in inventory age. In an article by WatchCharts, the median time it now takes for a Rolex to sell is at a three-year high, and total supply on secondary markets is now more than double what it was prior to 2021. The downward trend has been consistent across brands like Patek Philippe and Audemars Piguet, although Omega and Cartier prices actually stabilized in the second half of 2023.

You're likely catching onto a theme: yes, the bubbles have popped. The frothy markets of 2020-2022 are no more, and it's now quality, once an afterthought, that has become the focal point of nearly all collectible markets. It’s clear that the shifting dynamics of the collectibles market have brought a change in market sentiment which underscores the need for informed decision-making.

If only there was a company conceived to help anyone navigate these evolving markets...

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