While the market simmers, caught between continuing economic uncertainty and desire for appealing material, auction realizations continue to recover from the lows achieved in April when the market bottomed after a three-year decline. Since then the market, as reflected in median auction realizations, has signaled recovery. The news out of Europe, on Main Street and Wall Street in America, is emotion filled and flailing between end-of-the-world and beginning of the next pronouncements but for the rare book business it is increasingly looking like a soft bottom was achieved six months ago. For collectible works on paper the worst may be over.
There are two caveats. This success, to some extent, is being achieved at the expense of the ‘percentage of lots sold’ that has weakened as prices, apparently driven by higher reserves, are rising. Motivated sellers could further weaken this trend if/as they elect to pursue a higher percentage of lots sold.
The market today is still 25% off the high achieved in March 2008. Should the market bottom have been reached in April it was, at that point, off 27%. Finally, there appears to be a large volume of material waiting in the wings to be sold. If the flow of material, into the rooms, increases, prices will face renewed downward pressure. The market appears to be firming but is thin.
For potential sellers questions abound. If I sell quickly I can sell some material for better prices but may be left with 40% of the consignment unsold. If I choose to sell most or all the material my reserves will be lower and some prices therefore lower. The math probably looks like this:
With higher reserves 60% sells at prices we’ll call 100%
With medium reserves 75% sells at prices we’ll call 95%
With low reserves 90% sells at prices we’ll call 90%