New Lessons: The Impact of the 2008-09 Economic Crisis on Collectors
When did the 21st century officially begin—January 1, 2000 or January 1, 2001? The great debate of 10 years ago has reached “who cares” status. As a 2000 proponent, I am happy to see the null/naught decade end and the tens decade begin.
As the null/naught decade concludes, the antiques and collectibles trade is once again in survival mode, a far cry from the tentative optimism as the decade began. The trade required five years to adapt to the 1988-89 economic downturn. The calm was short-lived. EBay’s arrival on Labor Day weekend of 1995 caused a seismic eruption whose shockwaves radiated through the trade for almost a decade. As the 21stcentury began, the trade accepted eBay as a long-term player, recognized its positive benefits outweighed its negatives, and incorporated it as part of the industry’s business model.
The antiques and collectibles community enjoyed a buoyant mood as 2008 began. Sellers at antiques malls, shops, shows and flea markets reduced asking prices to the point where they were competitive and even cheaper than eBay. Attendance increased at sale venues. Auction prices were strong. While the number of collectors in many collecting categories continued to decrease, individuals buying for decorating and reuse purposes increased. Antiques and collectibles became part of the environmental movement.
Although a final judgment is 10 or more years in the future, the 2008-09 economic crisis appears to be having a greater impact on the antiques and collectibles trade than any previous event. The trade adapted to eBay in less than a decade. Its adjustment to the 2008-09 economic crisis will take much longer.
Author’s Note No. 1: I was tempted to use recover/recovery rather than adapt/adjustment in the two previous sentences. Since recover and recovery often imply a return to the status quo, I rejected them. The impact of the 2008-09 economic crisis on the antiques and collectibles trade makes change inevitable. The good news is that the antiques and collectibles trade is resilient, a survivor. It will adapt and adjust. It will exist in 2020, 2050, and beyond. Whether the change required for survival is good, bad, or indifferent remains to be determined.
A review of the lessons learned from the 1988-89 economic downturn is necessary to understand the enormous impact of the lessons the 2008-09 economic crisis is teaching. The general rule prior to the 1988-89 economic downturn was that when stock values were high, antiques and collectibles values were low. Investors abandoned stocks and bought tangibles during difficult economic times. Antiques, viewed as tangible goods, benefited from this mindset.
Author’s Note No. 2: Starting in the mid-1970s, the value of antiques began to increase at a rate far in excess of inflation and stock growth. Investors viewed antiques as speculative commodities. When short-term investors sold in the late 1980s, losses far outnumbered gains. This added to the malaise in the antiques and collectibles market at the time. The collectibles market was still in its infancy in the 1980s. Investors did not view high-end collectibles as a commodity on par with antiques until the late 1990s.
Stock prices remained strong during the 1988-89 economic downturn, a surprise to economists as well as those in the antiques and collectibles industry. Anticipated new capital did not flow down into the antiques and collectibles market.
The major lesson learned from the 1988-89 economic downturn was that an object could price itself out of the market. Sellers assumed there was no limit to an object’s worth. As a result, many transactions were dealer to dealer sales rather than to individuals who removed the objects from the marketplace for a period of time. The answer to “is the winner the person who sells an object and has the money or the person who pays a price he will not recover in his lifetime” became the person with the money.
The general public’s reaction to increasing asking prices was to stop buying. Collectors, who had been ignored by the “if you do not buy it at my price, someone else will” dealers, were back in the buying driver’s seat. They took revenge for this cavalier treatment. Their selective buying contributed little to sustaining the market.
Dealers reduced inventory to weather the crisis. Dealer stock has remained low since that time. Dealer to dealer sales decreased by 50-plus-percent.
The recovery from the 1988-89 economic downturn, a return to the pre-downturn status quo, took fewer than five years. The 1995 antiques and collectibles market resembled the 1985 market on many fronts, e.g., preservation of existing sales venues and the type of objects offered for sale. Asking prices that had been adjusted downward were rising. Optimism was the order of the day.
As the American Dow Jones Industrial Average continues to approach 10,000 from its low of $6,469.95 in March 2009, it is time to assess the lessons the 2008-09 economic crisis already has taught the antiques and collectibles trade. The crisis is far from over. When it ends, some lessons may need to be modified or dropped. New lessons may be identified. Ten current lessons to consider follow:
1. Consumer confidence plays a larger role than ever before in the economic viability of the antiques and collectibles marketplace. Antiques and collectibles are once again viewed as a luxury rather than a necessity. When discretionary income decreases or becomes non-existent, luxury sales decrease. Antiques and collectibles no longer sell themselves. Sellers now have to convince individuals to buy them.
2. When individuals save, sales decrease. Money in the bank is not money spent in the field. In addition, more and more individuals are curtailing credit card use. The move to live within one’s means is growing. “Do I really need it?” is becoming a common question, a question that does not bode well for antiques and collectibles.
3. The traditional collector and the categories he/she collected are disappearing. Young collectors are not replacing older collectors in most traditional collecting categories, i.e., those categories found in general antiques and collectibles price guides. Interest in the distant past has lessened. Many young people have no interest in family heirlooms. They do not value them monetarily (forget family value), have no interest in storing them, and see no use for them in their daily lives.
4. The value gap between the high-end and middle- and low-end within collecting categories continues to increase. As the investor replaces the collector as the key player in many collecting categories, greater and greater value emphasis is placed on high-end objects. Investors have no interest in middle to low-end material.
5. The volume of middle- to low-end material offered for sale has flooded the market. Once collector demands are satisfied, value disappears. Value requires a buyer. Many collectibles, albeit some antiques as well, have reached a point where they have minimal to no value. The list expands daily.
6. The market is global. The Internet expanded the global market for antiques and collectibles exponentially. Foreign markets offered a viable sale alternative during flat American markets. The 2008-09 economic crisis is global. Many foreign markets, e.g., the Japanese market for antique American phonographs, have disappeared. The American antiques and collectibles market no longer exists in isolation.
7. The sale of antiques and collectibles for decorating and reuse continues to increase. As a result, what runs hot is trendy and volatile. Few collecting categories remain in vogue for longer than six months. When a collecting category loses favor, there is no guarantee interest in it will ever reignite.
8. Affordability, especially for the reuse buyer, once again plays a major role in the buying decision. Antiques and collectibles that are priced cheaper-than-new sell. However, even when prices reflect this, younger individuals prefer to buy new. The antiques and collectibles community faces a major challenge in combating the negative stigma attached to older goods.
9. Prices have fallen, even in the antiques sector, to a level as deep as 25 cents on the pre-2008-09 dollar in some categories. Collectors, dealers and others are raising the question: “what is a fair price?” They do no like the answer. The general impression is that some objects will never regain their pre-2008-09 price level and those that do may require a decade or more to achieve this goal.
10. Change is continual. A return to the status quo of 2005 is impossible. The antiques and collectibles trade will emerge from the 2008-09 economic crisis a far different entity than before. While the degree of change may decrease, it will never cease. Adaptation and adjustment will be continual.
The antiques and collectibles trade no longer controls its destiny. Outside forces, whether Martha Stewart or the world economy, determine our fate. The catch phrase used by the Borg of the Star Trek fictional universe applies: Resistance is futile.
Given the above, why am I optimistic about the future of the antiques and collectibles trade? First, the trade is resilient. It will adapt and adjust. Second, I live in the present and future and not the past. I accept what is. Third, I welcome change and the challenges it presents. I am living through one of the most exciting periods the antiques and collectibles trade has experienced, and I have no intention of dying before I see what happens.
Rinker Enterprises and Harry L. Rinker are on the Internet. Check out his Web site: http://www.harryrinker.com
You can listen and participate in “WHATCHA GOT?,” Harry’s antiques-and-collectibles radio call-in show on Sunday mornings between 8 a.m. and 10 a.m. Eastern Time. It streams live on the Genesis Communications Network.
“SELL, KEEP OR TOSS? HOW TO DOWNSIZE A HOME, SETTLE AN ESTATE, AND APPRAISE PERSONAL PROPERTY” (House of Collectibles, an imprint of the Random House Information Group), Harry’s latest book, is available at your favorite bookstore and via Harry’s Web site.
Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the 20th century. Selected letters will be answered on this site. Harry cannot provide personal answers. Photos and other material submitted cannot be returned. Send your questions to: Rinker on Collectibles, 5093 Vera Cruz Road, Emmaus, PA 18049. You also can e-mail your questions to email@example.com. Only e-mails containing a full name and mailing address will be considered. Please indicate that these are questions for WorthPoint.
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