An antiques and fine art dealer from Santa Barbara rang me up yesterday, to discuss our mutual plans for the upcoming Merchandise Mart Antiques Show in Chicago in mid October. This is should be a wonderful event, a terrific venue, with the Mart pulling out all the stops to promote the show.
My dealer friend is actually in Montecito, a small community adjacent to the south side of Santa Barbara and, if you can believe it, even tonier. Montecito’s best known new arrival, Oprah Winfrey, struggles by within her 40,000 square foot home. No, the digits didn’t stick on my keyboard- 40,000 square feet.
We were discussing business, as dealers are wont to do, chatting about traffic through the galleries. Both of us have had the same experience for the month of August. Specifically, gallery traffic is way up over last year, although sales for both of us are up only marginally, with concerns about the US housing market, and its spillover into the world’s financial markets, creating a sense of unease amongst antiques and fine art buyers. Even so, with the amount of interest and gallery traffic we’ve had, I would opine that, when financial markets resume straight and level flight, we will reap the benefit of pent up demand for our material.
When people buy in our business, it is less about real income and more about perception of wealth. As with any first time home buyer, our clients, too, tend to make purchases when the economic mood is upbeat. Some time ago, I read one prediction that, an inadvertent result of the electronic information age, economic cycles would tend to be quicker, and more extreme in their brief tenure. Certainly, as people formerly read so frequently of the impending bursting of a bubble in residential housing prices, sure enough, demand cooled, and, more of a sputtering than a bursting, prices have moderated. Not everywhere, though- don’t expect to find too many distressed properties up for grabs in Montecito. The knock on effect has been felt in world financial markets, as we’ve seen over the last month. Here, of course, there have been some rich pickings, with Hank Greenberg and Warren Buffet making acquisitions in the billions. What do they know that everyone else seems to have forgot? Simply that fear, not fundamentals, have been lately ruling the financial markets. In terms of the underlying residential housing market, fear has, for the moment, suspended demand amongst home buyers, but hasn’t replaced it.