During a talk at the Parrish Art Museum in the Hamptons last week, mega-dealer Larry Gagosian was asked for his predictions on whether an enormous amount of art could hit the market in the coming years as aging boomers die and their collections pass to their heirs. Bloomberg recently put the potential haul at around $1 trillion and warned that younger generations may have little interest in keeping what their parents collected.
“I guess the worry is that it will push prices down,” Gagosian said of a potential massive influx of art into the market, according to Puck’s Wall Power newsletter. But the 81-year-old market titan also sees another possibility in the offing: good collectors would view falling prices as “a buying opportunity.”
“I’m not worried about it,” he added.
For years, the art trade has been eyeing the Great Wealth Transfer—as the billions of dollars expected to pass from older Americans to their heirs is often called—as both an opportunity and a threat. On one side is the promise of a newly flush generation of collectors. On the other is the prospect that those same heirs will dump their parents’ Picassos, Warhols, Monets, and whatever else they have no interest in hanging over the sofa.
But two recent analyses suggest such speculation may be considerably less apocalyptic than advertised. Wall Power’s Marion Maneker took aim at the $1 trillion figure itself. The number comes from Deloitte and ArtTactic, which estimated that roughly $992 billion in art and collectibles could change hands over the next decade. But that isn’t $992 billion worth of identified paintings sitting in warehouses waiting for an auction date.
Instead, the estimate works backward from the wealth held by ultra-high-net-worth families and assumes that roughly 5 percent of it consists of art and collectibles. What exactly qualifies as an “art and collectible”—and of what quality—in that calculation is part of the question.
There is also the matter of what happens when all this stuff actually reaches the market.
The global art market turns over roughly $60 billion annually, according to the most recent Art Basel and UBS Art Market Report. If anything approaching $1 trillion of additional art really did arrive over the next decade, either spending would have to increase dramatically or prices would have to come down: bad news if for an heir hoping to cash out at yesterday’s valuations, good news for any buyer looking to scoop up blue-chip art at bargain prices.
And the Great Wealth Transfer may prove considerably more useful for people selling inherited art than for dealers hoping that the transfer will suddenly manufacture a huge new collecting class.
Writing in his Gray Market newsletter last week, art market columnist Tim Schneider pointed to new research from Visa estimating that roughly $93 trillion in American assets will be inherited over the next 20 years. About three-quarters of the households expected to receive that money are already among the wealthiest 10 percent of Americans.
And a sizable portion of the inheritance won’t become walking-around money. Visa estimates that trillions will instead go toward debt, retirement spending, taxes, philanthropy, savings, and investments. After accounting for those buckets, the researchers estimated roughly $8 trillion would be available for other spending over two decades.
For the art trade, Schneider argues, the more immediate opportunity—for auction houses, secondary-market dealers, advisers, and lawyers, to name a few—may be in helping wealthy heirs figure out what to do with the objects they already own. After all, a trillion dollars is only worth a trillion dollars if someone is willing to pay for it.
