What On Earth is Going On With the Art Market?

As we look back on the most expensive paintings ever sold, it's worth examining the current state of the industry, and the "art-as-investment" mentality.

How much is a lot?, Ryan Gander ca. 2025. On view at the Summer Exhibition of London’s Royal Academy. Photographed by Naomi Rea for Artnet.

This year, the spring auction season ended not with a bang but a whimper.

Auctions at Christie’s, Sotheby’s, and Phillips all failed to meet sales estimates. Even as sales at Art Basel (which wrapped up last week) demonstrated an upward tick, the overall trend of the past few years is that art sales have decreased.

I’ve been thinking about the art market quite a bit lately. Over on the Crossroads YouTube channel, my most recent video explored the top five most expensive paintings ever sold, and the answers might be surprising to readers. What I noticed when conducting research for the video was that even when adjusting for inflation, the top five paintings were all sold during the 21st century, but the latest sold in 2017.

This fit a pattern explored in a recent essay by Naomi Rea, the editor-in-chief of Artnet. We have grown accustomed to the mentality that art is an investment, and many wealthy buyers decide their purchases not based necessarily on appreciation for the artist, but whether or not the work will appreciate in value. In the 2000s, the art-as-investment mentality went haywire, leading to a period of eye-watering inflationary pricing.

But is the bubble bursting? As Rea wrote in her article:

This isn’t just a matter of price correction, however. It’s a rupture in the logic that once upheld prices as proxies for prestige and demand. Now, $30,000 gets you a resume-light emerging artist, $300,000 a mid-career work no one can flip, and $30 million a lackluster late Picasso. The signals are scrambled. Speculators have vanished. Even seasoned buyers are pausing. The art market has lost its grip on price-setting—and dealers must recalibrate.

For most of human history, people bought art with the intention of actually keeping it. Rich people housed their collections in family estates, and even in modest homes, art was something you passed down to your children, not something you “flipped.” Ownership of fine art wasn’t solely the domain of the wealthy.

But during the mid-20th century, this changed. Pop art was all the rage, and artists like Andy Warhol and Roy Lichtenstein commanded mainstream attention. It’s ironic that this period marked a democratization of arts education for the public, while also launching the ethos that art was not a treasured family heirloom but an asset class, no more meaningful or indicative of the richness of the human spirit than stocks or bonds. Prices inevitably skyrocketed, locking out most buyers.

Ryan Gander’s outdoor installation (above) for the Royal Academy’s 2025 Summer Exhibition in London points out this dismal state of affairs. On a giant black ball, which I can’t help but view as a black hole, Gander poses the question, “How much is a lot?”

I should note that I don’t blame the artists for taking advantage where they can. If some billionaire wants to spend crazy money on your art, I don’t begrudge you even a little. Art is a notoriously difficult industry in which to carve out a career, and painters don’t have the option of selling copies of books or concert tickets. In fine art, a masterpiece is one-of-one.

But in the case of these gargantuan sales, they typically don’t occur on the primary market, where artists have a chance to make money on their own work. Top sales usually occur on the secondary market, after these works have had a chance to appreciate in value.

On one hand, a big sale on the secondary market can boost an artist’s reputation. Even though they won’t see any money from the transaction, they can raise prices on future works. On the other hand, speculation poses risks for the artist, which is why the top gallerists can appear quite snooty in “sussing out” a potential buyer’s background, credentials, interests, and ties to institutions where they might lend a work for public display (thereby elevating an artist’s profile).

Some of the snobbishness is plainly ridiculous. Some is strategic: if you’re a speculator trying to quickly “flip” a piece, and you’re unable to do so, you could hurt that artist’s career by creating the perception that their works won’t sell.

In 2021, Freakonomics put together a fascinating series on the hidden side of the art market, in which they interviewed top gallerists, dealers, museums, economists, and of course, the painters themselves. One of the more illuminating exchanges in the series, which I find myself recalling whenever headlines about the market enter my inbox, is the following conversation between Stephen Dubner and Magnus Resch, an economist who specializes in the art market. (Note that the market was in a stronger position when this interview took place.)

RESCH: My students are mostly business students. I always ask them, “What do you want to learn?” They say, “How can I make money in the market?”

DUBNER: Okay, what’s the short answer to that?

RESCH: You can’t.

DUBNER: Because why?

RESCH: Art is a bad investment. There are only a few artists that are really worth investing in. 99.9 percent of the artists that you see at galleries and exhibitions, their value will never increase. The art market has too much supply, meaning there are way too many artists meeting very little demand.

DUBNER: And yet, if all one does is read the headlines, one would think the art market is the best it’s ever been because we hear about record sales at the auction houses. Christie’s, Sotheby’s, even Phillips just had a massive record.

RESCH: What we’re seeing are two art worlds. One is at the very top. Twenty artists are making 40 percent of the value of the auction art world while everyone else is struggling. Same on the gallery side, you have a few galleries that are dominating the art market, while all the other galleries are failing.

DUBNER: So Magnus, what is your mission?

RESCH: I’d like to make the art market more transparent. So more people buy art. The biggest problem in the art world today is that not enough people are buying art. Two hundred years ago, it was very common to have 20 to 30 artworks per household. Now, look around you. How many artworks do you have at home? We somehow lost our love for art. We enjoy viewing it in museums, but we don’t enjoy buying it.

DUBNER: And your argument is that we’ve lost our love in part because most of us have been priced out?

RESCH: We lost it because gallerists made it incredibly difficult to buy art. They established this aura of exclusivity. They established the story that art will go up in value quite dramatically. So everyone is on the hunt for the next Basquiat and Picasso, but they can’t find it. So they get lost. Why don’t we buy art because we love it, and we are supporting a community? We need to change it. And I think we can bring that change by making the art market more transparent. The primary market, where most of the artworks are sold, is a complete black box.

Art is a bad investment. Not the words someone would want to hear if they’ve just spent $100,000 on a new painting. And yet, Resch’s point that almost all art won’t appreciate in value rings true, and it speaks to the emptiness of the art-as-investment mentality.

As I write this, I inevitably wonder how fine artists would make money any other way. The sad reality is that I’m not sure we live in a world in which most wealthy people would spend money on art if they didn’t think they could get something out of it. (Am I being too cynical? I certainly hope so!) I’ve written before about literacy decline, and I feel much of it comes back to the public’s perception that an education in the arts and humanities is superfluous. What is the spiritual value of art if your soul has been so weathered that only numbers matter?

Markets ebb and flow. Even if the art market’s bubble bursts, I don’t doubt that it will recover over time. The real question is if we can recover some deeper appreciation for the role of art in our lives and make participation in the market more accessible to the public. Call me a romantic, but art is meant to be loved.