Rinker's Opinion: The Peak of a Collecting Category
inAugust 15, 2013 - 11:24am
How do you gauge when the popularity of a collecting category is peaking?
This is a critical question in today’s trendy market. No collecting category remains hot forever. Identifying the approach of the peak of a price run in a collecting category is especially important to investors, as opposed to collectors. The investor’s goal is to sell at or near the price peak, not when prices begin their downward trend.
Not being able to identify the price peak also is disastrous to bandwagon buyers, those who need to participate in a popular collecting trend to be part of the “in’ crowd. Far too many jump onboard near the peak, at the peak, or just as the market is beginning to decline. They pay prices that they will never recover when they sell, let alone make a financial profit.
When a collecting category is hot, prices often double or triple every two to three months. This applies to every item in the collecting category – common, above average, hard to find, upper echelon, and masterpiece (ultimate unit pieces).
As the run reaches its peak, prices stabilize for common, above average, and hard to find pieces. As a result of the price run, a flood of objects from the collecting enter the market. Supply, especially for the common, above average, and hard to find objects, exceeds demand. The same items at roughly the same price start appearing in booth after booth as dealers try to capitalize on the demand. Buyers develop a sense of familiarity with the object in the collecting category, a “haven’t I seen that before” mindset.
While prices continue to rise for upper echelon and masterpiece objects, the increases are smaller than during the price run. In many cases, these pieces reach a point where they are beyond the budget of most collectors.
If a collectors’ club did not exist prior to a price run in a collecting category, one is created. In today’s digital age, this club may assemble on the internet as opposed to a convention hotel. A collectors’ club allows collectors to meet their rivals. A network of unreported private sales develops.
In the 20th century the three price guide rule applied. When a third printed price guide appeared or a price guide reached its third or fourth edition, the price run usually was near or at its peak. The golden age of the printed general antiques and collectibles price guide and the specialized price guides is over. This hallmark is no longer applicable.
At the moment, the three price guide rule cannot be applied to the internet. While the number of specialized price guide websites grows each year, there are only a few collecting categories where rival webmasters offer value guides for the same collecting category. The difficulty is that these webmasters have been unable to find a formula that generates sufficient revenue to create and maintain these price guides. The alluring quality of “a labor of love” is limited.
Again, in the past, the trade periodicals were a barometer to track the strength of a price run. Preceding and during the run, front page stories appeared regularly. Reports of record prices achieved at auction were common place. The slippage of the collecting category from the front page to the inside or its disappearance all together, signaled the end of the price run.
[Author’s Aside: Record prices are not necessarily an indicator of a price run in a collecting category. A large number of record prices have been recorded in collecting categories in the past five years. There are enough collectors to maintain the high-end of any collecting category. If auctioneers group the majority of items in the category into lots in order to achieve a bottom selling price of $300 per lot, the collecting category is not in a price run. A price run impacts all levels within the collecting category.]
Dealers give “hot” objects the best display space on tables or in cases. Placing objects from a collecting category toward the back of the table or underneath is a strong indication buyer interest is fading. A collecting category’s disappearance is a sure sign the price run has peaked.
“Buzz,” within and without the trade, plays a critical role in sustaining a price run. A positive buzz keeps the price run alive. Any hesitancy to talk positively about a collecting category, especially buyers sharing with others that they have moved on to another collecting category, slows the price run.
Finally, dealers often refuse to negotiate or discount 10 percent or less during a price run. When dealers start quoting price discounts over 10 percent, the price run is nearing its peak. When the discounts exceed 20 percent, the run has peaked. Higher discounts indicate a price decline.
What signs do you use to indicate that prices in a collecting category are cooling off? Share your thoughts at email@example.com.
Mid-Century Modern is the big thing now. Do you think it will go the same way Victorian & Oak furniture has gone?
Mid-Century Modern is a fad decorator Look. It ranks with Art Nouveau, Art Deco, Arts & Craft, and Victorian. Like all these Looks, Mid-Century Modern will enjoy revivals. The Look will never fade. There always will be individuals to whom it appeals.
The Art Nouveau, Art Deco, Arts & Crafts (to some extent), and Victorian Looks paid homage to key ceramic, glass, furniture, and metal manufacturers. While a few pieces were identified with a specific designer, most were not.
Mid-Century Modern is different. It is a Look that is industrial designer driven. Collectors focus more on the designers than they do on the manufacturers that executed the designs. Do not be fooled by the collectors of Herman Miller or Knoll International furniture. Collectors who own material from these manufacturers know more about the person who designed the piece than the manufacturer who created it.
I grew up when Mid-Century Modern was period. It is fun to witness its arrival in the collecting sphere. Although few make the analogy, I equate it with the aesthetic furniture movement of the early 20th century. Many Mid-Century Modern pieces incorporate aesthetics, design, and functionality in one form. There is a fine arts sculptural aspect to Mid-Century Modern pieces.
Mid-Century Modern also works well with the sparse, simplistic styles of Ikea and other “in” Chain store products. Its color tones also blend well with current decorator colors.
Mid-Century Modern is a global look. America is not the leading proponent. Its strength is in Europe, especially Germany and Italy. As such, it runs counter to the average American’s traditional, contemporary tastes.
There are other concerns. First, Mid-Century Modern is a cosmopolitan, big city look. With the exception of Chicago, it is heavily bicoastal. It is not popular in the countryside. Second, the average unit price for above average pieces has passed $500. A person needs deep pockets to collect Mid-Century Modern. Third, Mid-Century Modern is not receiving as much press in home decorating magazines as it did in the past. There already are signs that the general public’s interest in Mid-Century modern is fading. Finally, contemporary furniture manufacturers are moving away from supporting the look.
The Victorian Era enjoyed its first revival in the 1980s, approximately 75 years after Queen Victoria died. The revival was over by the dawn of the 21st century. The Mid-Century Modern revival is occurring approximately 50 years after the initial design period. Its lasting ability remains to be tested.
Reader’s Response: In a July 15 email, “D” responded to my recent blog on Silver and Silver Plate:
“We have six sets of china and use them on holidays with family (and hand wash). With general company, I use plain white Crate and Barrel plates. I recently sold a large collection of quality silver plate serving pieces and was amazed at the high prices it brought. So, there must still be people who have use for quality items.
“As a side note: one of my buyers of silver mentioned she and her husband were tired of going to ‘Fine’ restaurants with all the noise and decided to cook at home for their friends and entertain in style.”
Is there something special about which you would like me to blog?
I love writing about antiques and collectibles and developments within the trade. I welcome your comments and suggestions as to topics you would like me to cover. E-mail your suggestions to firstname.lastname@example.org.