Auction Results Suffer in a Tough Economy

CHICAGO, October 7, 2008.  Like the orchestra playing on the deck as the Titanic made its final descent, Wright Auctions of Chicago gamely held their Modern Design auction of mid to late twentieth century furnishings and art in the midst of the global economic tsunami that’s engulfing us all.  (Dow down 500 that day!)  With even the rich feeling the pain of evaporating investments, some diehard collectors practiced retail therapy by opening their thinning wallets to pry loose their last few dollars.  (Brother, can you spare an Eames LCW chair?)

After a quick analysis of the 417 lots by such stalwarts as Charles and Ray Eames, George Nelson, Isamu Noguchi, Norman Cherner, Florence Knoll, George Nakashima, Edward Wormley, Hans Wegner, Milo Baughman, Jean Prouve and others, here’s how the results broke down:

    117 lots sold within their projected ranges (28%)

    157 lots did not meet their reserve (37%)

    49 lots sold below their ranges (12%)

    94 lots sold above their projected ranges (23%)

Of the 157 lots that did not sell, many were assorted tables and chairs by George Nelson, George Nakashima, Vladimir Kagan, Hugh Newell Jacobsen, Florence Knoll, Finn Juhl, Gio Ponti and, surprisingly, various pairs of Mies van der Rohe’s Barcelona chairs reasonably priced between $5,000 and $7,000.

A Swan Chair by Arne Jacobsen estimated between $4,000 and $6,000 sold for a conservative $4,800 – considerably less than prices as high as $7,200 I’ve seen in recent years.

Of the 94 that sold above their projected ranges, there were a few notable pieces that hit it way out of the ballpark:

A chair by Charles Eames and Eero Saarinen for the MoMA Organic Design Competition which was expected to get between $15,000 and $20,000 sold for a whopping $50,400.

 

 

An Eames DAR shell chair on an “”Eiffel” base that was expected to get between $500 and $700 got a remarkable $5,400.

 

 

A pair of Eames DKR wire chairs with “bikini” slip covers that were projected to get $500 to $700 roped-in $3,000.

 

 

An Arredoluce 3-arm floor lamp in all-white that was estimated at $5-7,000 got $15,600 (while a nearly identical Arredoluce lamp with blue, red and yellow shades got a mere $8,400.)

 

An Eames ETR “surfboard” coffee table that was projected to get $3-5,000 sold for $24,000!  Kowabunga, dude!

 

 

And the surprise of the evening was a 1937 bakelite radio by Isamu Noguchi for Zenith that was expected to get $3-5,000 and instead sold for an eye-popping $22,800!  (And it doesn’t even play FM!  What’s that about?!?)

 

Readers of my posts on the Eames Lounge 670 and Ottoman 671 will be interested to know that a vintage rosewood model by Herman Miller sold for $3,120 – within its projected range of $3,000-$4,000 but way below its historic high of $7,000.  And an early Noguchi coffee table in ebony with a rare green-glass top was a bargain at $1,920, a bit shy of it’s projected range of $2,000-$3,000 and far less than the $6,600 the same table got at the same auction last year – perhaps a sign of the times.

So how does this compare to years past?  There are too many variables to make a definitive apples-to-apples comparison but Wright’s October 2007 Modern auction raked in $3.9 million (an average of $7,876 per lot) to this year’s $2.1 million ($5,155 per lot) – a stunning 45% drop.  And whereas 37% of the lots sold for above the projected range in 2007, only 23% did so in 2008.  Unsold lots increased from 21% to 37%.

Of special note, Barcelona chairs that sold above estimates for $7,200 a pair in 2007 had no takers at all in 2008 despite a minimum reserve of only $5,000.  An Edward Wormley 6329 sofa that sold for three times its estimate for $14,400 in 2007 got only $4,800 in 2008.  And a Comprehensive Storage System by George Nelson that sold for a whopping $36,750 in 2007 (estimated at $5-7,000) got a mere $8,400 in 2008.  Ouch!  On the other hand, anything Eames such as assorted DCW, LCW and RAR chairs all increased in value by up to 450% from last year’s prices.

A logical conclusion one could draw from these results is that with so many of the lots by Charles and Ray Eames selling for far above estimates this year and for far higher prices than a year ago, anything by Eames has been a stellar investment for those lucky sellers.  Nakashima, Nelson and Kagan collectors?  Not so much.  But times change and tastes shift so better luck next time.  To see the entire results for yourself, visit the Wright20 site here.

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What Does the Wall Street Bail-out Mean For You*?

* By “you”, of course, I mean “me” – unless you’re also a Beverly Hills real estate investor and flip-artist.

 

October 3 2008   Excuse me for not posting for a couple weeks, but I’ve been glued to every and any news source I can find to follow the meltdown of our financial system – and staving off my own emotional meltdown in the process.  Regardless of your politics, there’s plenty of blame to be shared across both sides of the aisle and this has been a long-time coming.  Like many of us, I’ve been hearing dire warnings from friends on Wall Street for over a year and dismissed them as kill-joy doomsayers like the crazy guy on the street-corner with the “The End Is Nigh” sign.  Let’s just hope he’s not right, too.

 

The silver lining to this gloomy black thunderhead of a cloud is that this could usher in a whole new era of better government, better oversight, stronger regulation and a newer, stronger, more vibrant and sound economy that opens new opportunities for all of us.  Or not.  We’ll start to find out a month from now.

 

Preparation plus opportunity equals success.  It’s an old saying with many taking credit for it but it’s true and timely.  Every change – no matter how painful – brings opportunity for those who are able to identify it and adapt to take advantage of it.  The real estate business will fundamentally change.  “Flipping” houses may or may not be a viable strategy at least for the near future but plenty of opportunities will exist – some we may not even have thought of yet.

 

The bright spot in the otherwise dreary real estate market up to now has been the high-end.  As the American middle-class weakens, the world’s rich have been getting richer as evidenced by the over-the-top demand for ultra-luxury goods including million-dollar cars and diamond-encrusted human skulls.  The very top-end of the real estate market in the select areas of Beverly Hills, Bel Air and Malibu (“Bevairbu”) has remained strong with a few clever realtors having their strongest years ever.  Houses in $10 to $30 million range in Bevairbu have been selling briskly to all-cash buyers.  When you’re not applying for a loan, you don’t care about mortgage rates.  And you can rationalize paying prices above appraisal values.  This explains the McCourt’s $19 million purchase of a crumbling beach shack on Malibu’s Carbon Beach next door to the Lautner-designed house they bought for over $33 million.  The number of sales of homes over $15 million in Beverly Hills and Bel Air increased over the last 12 months (ending October 1 2008) to a five-year high with more sales than ever getting near or above asking price in fewer than 70 days on market.  Remarkable, given what’s been going on everywhere else.  And positive sales trends in Beverly Hills is reported in a separate posting here.

 

Is that party over?  Too soon to tell for sure.  The world’s super-rich may be too insulated to be affected.  Most of these buyers are foreigners – Russian oligarchs, Middle Eastern oil barons or members of exiled political regimes.  They may be drawn more than ever to the relatively stable market of Los Angeles’ Westside in an increasingly unstable world.

 

My advice for the near term is to move into rental properties, building a portfolio of small homes in solid middle-class neighborhoods with a minimum of a five-year time horizon while keeping an eye on the sales activity in the usually recession-proof Bevairbu. 

 

For more about investing in this tumultuous market, read “Amid the Chaos, Is This Any Time to Invest in Real Estate?

Check back in a few months to see how my advice holds.