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For those who truly love art, the market is becoming more exciting than it has been in a long time. The splendid news is that auctions are at last reverting to a natural balance that seemed lost forever as a result of speculation that spiraled ever faster out of control. 

The market correction became clear this fall when Sotheby’s and Christie’s held their sales of Impressionist and modern art. While the main sessions, which began at Sotheby’s on November 3 and ended on November 6 with the second Christie’s evening sale, left outsiders under the impression that the market was taking a beating, these auctions were actually surprisingly successful. Indeed, they pointed to the fundamental vigor of an art market allowed to function free of manipulation, because in contrast to the housing or banking sectors, it is fueled by desire — a powerful motivation that continues to drive buyers.

A welcome novelty is that in the fast-deteriorating economic environment, auction-house specialists were able to make a stand against the excessive demands of speculation-minded vendors for the first time since the 1990 market crash. In a historic turnabout, Sotheby’s and Christie’s experts went back to consignors to persuade them to bring down inflated estimates and reserves. Year after year, estimates had been pushed up by consignors who were convinced that higher figures led to higher profits in a market where innumerable newcomers, incapable of assessing for themselves the artistic merit of a lot, took at face value whatever statements and numbers were printed in the catalogues. The growing scarcity of goods in the midst of rising demand made it impossible for the best experts to resist the pressure. They were as eager to fill their catalogues as they were scared by the thought of losing out to the competition. Paradoxically, the financial tempest that blew hard during that fateful November week turned out to be the experts’ saving grace. Most consignors heeded the experts’ recommendations, which allowed both auction houses to post sale totals that were astounding given the economic context.

By the end of the November 3 evening session, Sotheby’s had sold 45 lots for $223.8 million. The sales pattern established that day deserves to be carefully considered by all those who buy or sell art. All three works of supreme importance went through the roof, showing that the last-chance syndrome is as effective as ever.

Kasimir Malevichs Suprematist Composition, 1916, which brought $60 million, set a world record not just for the avant-garde artist, but for any Russian painter. An irresistible and powerful psychological incentive played a role in the making of the extraordinary price. In 1927 Malevich took Suprematist Composition out of Russia and had it displayed in commercial exhibitions in Warsaw and Berlin and was later prevented by the Communist regime from returning to Germany. Malevich had entrusted his picture to an architect who reportedly sold it to the Stedelijk Museum, in Amsterdam. There it spent the next 50 years before being returned to the artist’s family in early 2008, following a protracted legal battle.

To admirers of 20th-century art, the release of the Malevich for sale felt like a miracle. This was a chance in a lifetime — hence the staggering price. The triumph, however, came with a warning. There is a limit to the price of every work, however rare and desirable. Now is not the time to try to squeeze an extra pound of flesh out of art buyers. Only one contender appears to have been in the running for the painting. Tobias Meyer, who was conducting the auction, opened the bidding at $49 million, slowly took it to $51.5 million, called out two more bids and brought down his hammer at $53 million. Those attending the sale got the distinct impression that a single commission bid on the auctioneer’s book, which was designated in the catalogue entry as an irrevocable bid, had allowed the Malevich to sell. With the sale charge, this raised the price to $60 million. The estimate quoted just moments before the sale was $55 million, well below the figure "in the region of $60 million" later printed in the press release. Presumably, the estimate and the reserve that came with it(generally set at around 10 percent below the lower end), had been reduced before the sale. Nevertheless, the final price was sensational, proving that major rarities continue to sell at top dollar even in a threatening economic environment.

The next two big scores came about after brisk competition, providing further evidence of the market’s vigor at the very top. Danseuse au repos, a large pastel heightened with gouache and done around 1879, is a quintessential Degas picture, both in subject (a ballet dancer) and in style (the slightly blurred effect takes the drawing as close to Impressionism as the French master ever went). At $37 million, it became the artist’s most expensive work on paper sold at auction.

The third important piece came up seven lots later and could easily have got into trouble. Vampire, painted in 1894 by Edvard Munch, is one of four versions of its subject, a red-haired woman bent over a man’s head with her arms wrapped around his shoulders. The picture is not handled in the painter’s Expressionist manner. However, the fierceness of the subject heralds the violence of Expressionism that came in a decade later, and in today’s market, where major Munchs no longer turn up, that did the trick. Vampire rose to a staggering $38.2 million, proving that works perceived to be of paramount importance are more expensive than they have ever been.

Another telling message about the underlying strength of the art market was delivered by the prices realized for pictures and sculptures that were very good but could not claim to be highly important. Virtually all found takers at 20 to 30 percent below the printed estimates, which Sotheby’s specialists had persuaded consignors to bring down in the days preceding the auction. This was the best news, paradoxical as it may sound. It is far more difficult to sell goods of any kind when prices go down in a crisis, because potential buyers are tempted to hold back in the hope that prices will sink even further. Moreover, if the goods in question are not seen as unique, selling them is yet more problematic. But the scarcity of any high-quality works in the Impressionist and modern category, which becomes more acute all the time, proved more powerful than any mental block induced by the financial turmoil.

A 1913 Juan Gris Cubist composition in oil on paper (later pasted on canvas) did brilliantly at $6.6 million, even if this was about 10 percent below the low estimate — while the strong colors of the picture make it attractive, the composition is awkward. Henri de Toulouse-Lautrecs Bal masqué, 1888, painted in shades of gray, likewise fetched a generous $4.6 million, nearly matching the lower end of the estimate. The costume-ball scene, which lacks color, was a model for an engraved illustration, and this does not place it among Toulouse-Lautrec’s most desirable works.

Even Femme au chapeau bleu garni d’une guirlande, a 1923-24 Picasso pastel from his Neoclassical period, did not do badly at $4.9 million — well below the lower end of the estimate — however disappointed its Japanese consignor might have felt. The woman’s pretty face is marred by unfortunate black chalk strokes on the side of one cheek and by an incomprehensible black smear to the right of the neck.

Sotheby’s pulled off some real stunts that remained unsung by the media, who failed to recognize them because most commentators focus on names instead of looking at the art. The most astonishing feat was the sale of Le tub, a large bronze in high relief "inscribed with the signature Degas," as the catalogue noted. The work was listed as "Numbered 26/f," pointing to the existence of many other casts, and was dated "circa 1921." As the painter died in 1917, Le tub is posthumous. Therefore, the sculptor did not take part in the trimming or the patination of the work, two essential operations in determining the appearance of a bronze. Le tub is legally authentic only because it was cast by permission of the estate holding the copyright. But in artistic terms, it is no more authentic than a copy of the master’s picture would be, with a difference: the posthumous copy of a painting might fetch a few hundred dollars, not $3.8 million, as Le tub did. That the bronze should have gone for so much money says a lot about the market’s ongoing bullishness.

All told, what happened on November 3 at Sotheby’s was a well-ordered and long-overdue price correction, accompanied by some brilliant sales. As will happen in such circumstances, there was one bargain: La Seine à Bougival, signed by Pissarro in 1871. The riverside view is part of the small number of dated works that stake out the early development of Impressionism. Well composed, La Seine à Bougival is painted in vigorous strokes, creating the sketchy effect that would become a hallmark of full-blown Impressionism. The Pissarro cost $1.9 million, roughly 10 percent less than the low estimate. Whoever bought it made a coup, albeit not a surprising one, as subtly nuanced Impressionist art has long been losing ground to pictures with an easy instant impact, whether Expressionist or Surrealist.

Further evidence that the market remains fundamentally healthy in the midst of the financial tempest came forth at the evening auctions on November 5 and 6 at Christie’s, during which time the Dow Jones dropped by 10 percent. Both sessions were short on substance. Several failures that would have been inevitable under any circumstances offer no lesson other than that complete duds with wild hopes pinned on them are doomed in any case. What does speak eloquently for the market is that this poor context failed to drag down the very few good works.

The November 5 session was particularly weak, despite the ambitious packaging of two collections dispersed that evening. Both were granted the unwarranted honor of separate hardcover catalogues.

The Hillman family collection included just one truly wonderful work: Georges Seurats Maison carrée, a black crayon sketch in which a house emerges from the abstract play of light and shadow. Done in the early 1880s in the Pointilliste master’s best black manner, the sketch soared to $1.1 million. Moments later, a brightly colored and very expressive cityscape painted by Jean Dubuffet in 1944 in his naive style realized $3.7 million, a strong price. Like Seurat’s drawing, the Dubuffet sold within the estimate.

Corrections were applied to a number of works that were quite good but had been estimated at a super maximum. Fernand Légers tude pour le modèle nu dans l’atelier, 1912, which is indeed a study on paper, performed very well at $3.3 million — despite what its $3.5 million to $4.5 million estimate might suggest. So did Giorgio de Chiricos Composition métaphysique, 1914 given its rather rigid handling and very mildly Surrealist tone, as it went for $6.1 million.

Other pictures that were fine, but no more, found takers, a remarkable indication of ongoing health — only the very best work will normally sell in a sick market. Toulouse-Lautrec’s Portrait de Henri Nocq, which sympathetically portrays one of the artist’s Belgian cronies, looks more like a genre picture than the psychological studies of the darker side of human nature typical of the French master at his best. The price, $4.5 million, was reasonable. Some would even call it generous.

Most failures were justified. Manets Fillette sur un banc, 1880, left unfinished by the artist, who was probably dissatisfied with it, carried an absurd $12 million to $18 million estimate. It dropped dead in the water.

The works from the Alice Lawrence collection that followed the Hillman family belongings had so little of any significance that Christie’s found it necessary to fit in some Art Deco furniture and objects that looked out of context. The one desirable painting within its range sold brilliantly. Magrittes L’Empire des lumières, 1947, soared to $3.6 million. Surrealist in mood but devoid of the prankish introduction of absurd details, the view of a house lit up in broad daylight is as good as Magritte can ever be.

The success of Louis Lozowicks 1922 Pittsburgh delivered a more telling, if less spectacular, bill of good health for the 20th-century painting market. The Russian-born artist, who emigrated to America at age 14, was back in Europe when he painted this Cubist cityscape slightly reminiscent of Lyonel Feiningers earlier work. While Lozowick is familiar to specialized collectors, he is hardly a celebrity. Pittsburgh could not have done much better than the $386,500 it realized.

One day later, a more significant test took the pulse of the market. Although Christie’s second evening auction, on November 6, was held after the Dow Jones had badly dipped once more, the stock market’s problems did not stop bidders from spending $146.7 million. Interestingly, the buying pattern was in line with the trend observed earlier in the week: Enormous prices were paid for splendid works of a caliber now seen only at distant intervals. A superb Cubist composition painted by Juan Gris in 1915, Livre, pipe et verres, nearly matched its high estimate, as it rose to $20.8 million. Even more surprising, Kandinskys Studie zu Improvisation 3, 1909, brought $16.9 million. Reflecting the Russian-born painter’s doctrinal considerations, the haphazard composition, which retains only traces of the figural world, is redeemed by its expressive color scheme. The incomprehensibly high estimate of $15 to $20 million gives the misleading impression that the Kandinsky was only moderately successful, when in fact the price it fetched was huge.

The same may be said of Picasso’s Deux personnages (Marie-Thérèse et sa soeur lisant), dashed off on April 10, 1934. In it, distant memories of the painter’s early Cubist phase combine with a distinct Surrealist touch curiously reflecting awareness of Magritte’s work. Done in a faux naive style with deliberate clumsy touches (notably in the windowpane), the painting has a pale color scheme and a soppy tone uncharacteristic of Picasso’s usually muscular oeuvre. Were it not for the $18 million to $25 million estimate, its price of $18 million would also have been recognized as gigantic.

Let us be honest: There were failures. But, reassuringly, these had more to do with the crass mediocrity of the works left stranded than with market weakness. Did those who bemoaned these casualties give them so much as a passing glance? Who would want an atypical watercolor by Kandinsky in pseudofolkloric Russian style for $2 million to $3 million? Or Deux hommes nus et enfant assis, painted by Picasso on May 21, 1965, in a deliberately silly, clumsy style for over $5 million? It was the painter’s way of thumbing his nose at the bourgeois establishment that this fervent Communist loathed and held in profound contempt.

Such displays of market chutzpah are now doomed. A huge sifting operation is under way. The rejects of past decades currently recycled at auction as demand keeps outdistancing supply do not appeal to those who know art, and no longer find takers among hordes of newcomers playing with art as they did with equities. These have now deserted the auction scene. Prices are gradually reverting to a more plausible level, thereby canceling the rampant inflation of the past two years. Sanity is being restored and this really calls for celebration.

"Salesroom Sanity" originally appeared in the January 2009 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's January 2009 Table of Contents.