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How Art Goes From Concept To Costly

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How Art Goes From Concept To Costly
Four main factors come into play.
SHOW TRANSCRIPT

In the immortal words of Dorinda Medley: "Money talks. Wealth whispers."

On the Upper East Side, the extravagantly well-to-do are supposed to be low-key about living large. But if Robin Leach taught us one lesson, it's also okay to be "Richie Rich."

One thing you'll find in the home of a Liberace or an elegant L'Oreal is artwork.

It not only speaks to a person's success, but it's typically considered a smart investment. How does appreciation for art turn into art appreciating in value? Four main factors come into play.

The first two are basic to any discussion of economics: supply and demand. Supply: What's on the market at any one time. A street corner artist is more affordable. A Van Gogh is always going to command mounds of money.

But if there are four Van Goghs, the supply might oversaturate the limited high-dollar market.

Then there's demand. The more scarce the work, considered to be high-quality and with a good pedigree of former owners, the more collectors are willing to pay for it. In that case, demand would be high. If demand is low, the price will follow.

The third factor is mood of the moment. 

"Artworks associated with movements that are currently fashionable will outperform other types of art. Contemporary art is currently outperforming impressionist art," writes The Conversation.

Finally, je ne sais quoi: that indefinable, ineffable quality that makes something so wonderful.

Yes, the Mona Lisa is a masterpiece, but there have been others with incredible smiles and perfect brush strokes. Nevertheless, she just has that thing, and fans the world over would do anything to have her in their collection.

In the optimal scenario, an investment piece will hit the market when there's low supply, high demand, cultural relevance and the "it factor." Easy, right?