Is It Warhol or Is It the Economy?

Liz Taylor? Overwrought, overrated and so yesterday.

The painting by Andy Warhol, that is. Not the violet-eyed actress, whose portrait disappointed auction-goers at Christie's Tuesday night, selling for a mere $23.6 million -- nearly $2 million short of its lowest estimated value.

"Liz" -- the 1963 portrait of a younger Taylor -- was reportedly owned by actor Hugh Grant, although Christie's would only say a private collector had offered it for sale.

The portrait was meant to be one of the highest ticket items at the post-war and contemporary art sale in New York City, valued between $25 million and $35 million.

Even though total sales fell in the middle of the predicted $271 million to $371 million range, some say volatility on Wall Street and in the real estate market is now spilling over into the art world.

Art dealers -- who point to a record-breaking $315 million Sotheby's auction the day after the lackluster Warhol sale -- insist sales are still brisk, but retail analysts point to new jitters among the weathiest buyers.

"At the very high end, they are pulling back," Marie Driscoll of the equity research department of Standard and Poor's told ABCNEWS.com.

The luxury market is being driven by those who earn more than $10 million a year, according to Driscoll. Sotheby's and Christie's rely on these high earners to sustain record auction sales.

"These people are the decision makers, the leaders of companies who know what's happening in the economy," she said. "They are seeing the big picture and the macro factors and are making their purchases accordingly."

Just last week, Sotheby's stock fell more than 30 percent after classic big-seller paintings by Van Gogh and Picasso failed to deliver high prices.

How Long Can It Last?

"With some of the economic news, the real collectors certainly think twice," Judith Selkowitz of New York City's Art Advisory Services Inc. told ABCNEWS.com. "Every time there is an ebullient sale, they ask, 'How long can this go on.'"

But art dealers and advisers say fears about an art-market collapse may be unfounded. The Christie's sale achieved the second-best auction result ever with $325 million in total sales and 16 artists breaking records.

According to Reuters, buyers claimed 93 percent of the works.

"I thought the prices were pretty high," said Selkowitz, a 37-year veteran who attended the Christie's auction. "The fact that ["Liz"] was owned by a movie star gave it some cache."

It turns out that Grant, whose caddish good looks were box-office gold in films like "Bridget Jones Diary" and "Four Weddings and a Funeral," made a good investment.

The New York Times reported that Grant paid $3.5 million for "Liz," thereby netting seven times the sale price. London dealer Gerald Fagginato bought "Liz" on Grant's behalf at Sotheby's in New York in 2001, the newspaper reported.

Grant's agent did not return ABC's phone calls and e-mails. Neither Sotheby's nor Christie's -- both in the midst of auctions today -- would confirm that Grant was the seller, though experts familiar with the collection have identified it as his.

Amy Cappellazzo, one of the heads of Christie's postwar and contemporary art department, told The New York Times that the seller is "taking advantage of the strength of today's market and turning his attention to work by younger artists."

Art used to belong to the rarified world of old-money collectors, but today, wealthy Americans who made billions in hedge funds and real estate have joined in, pushing up prices -- and their own snob appeal.

"Many people with a lot of money equate art with status," according to Selkowitz, who said that if you own great works of art, "you can hob nob around people of the art world and the auction houses and that social life. For many that is important, and it does drive the prices up."

Hey Big Spenders

Art prices have skyrocketed and some works are overvalued, but the market is still thriving, say most art experts, and even though Wall Street is jittery, luxury buyers are still spending.

The market has soared because these younger, richer art buyers are willing to spend big to get what they want. The high-end bidding has also been fueled by the shrinking value of the dollar that has attracted super-rich Asians, Russians and Europeans.

But that could be changing if, as some pessimists say, even the art markets face a correction.

"Liz" -- one of a series of 13 portraits Warhol did of Taylor, each against a different colored background -- exaggerates the actress's purple eyes and red-hot lips against bright turquoise.

The 40-inch square image is screen-printed, but Warhol embellished her eyes, skin and makeup with paint applied by hand.

An earlier image, against a red background, was bought for $12.6 million by London jeweler Laurence Graff in 2005, the highest price ever gleaned for any of the series.

Warhol, himself an icon of the 1960s, was also fascinated with Marilyn Monroe and Jackie Kennedy, two other fashion symbols of the decade.

At the time, he said of the "Liz" series, "I started those a long time ago when she was so sick and everybody said she was going to die. Now I am doing them all over, putting bright colors on her lips and eyes."

Taylor nearly died of pneumonia in 1960 and required a tracheotomy. Six years later, in 1966, Taylor's weight shot up and she portrayed not the sexy ruler in "Cleopatra" (1963) but a haggard and boozy Martha in "Who's Afraid of Virginia Wolf," which earned her an Academy Award for best actress.

Like her fading beauty, so goes Warhol's appeal, say some arts dealers. That, and high prices, may account for the disappointing sale.

New York gallery owner Clara Diament Sujo told ABCNEWS.com that the $25 million asking price for Warhol's "Liz" was inflated -- not disappointing.

Pretty Penny

"The market is following a fantasy," she said. "It's such a repetitive image, and you can just put it in the kitchen. Who else needs to see Elizabeth again and again by Warhol, but in another color?"

"Imagine what you could buy with $25 million," said Sujo, whose CDS Gallery was the first to create a worldwide market for Latin American art in 1979. "I could build a collection from Diego Rivera to Roberto Matta to Joaquín Torres-García for the whole family for a lifetime."

"My god," said Sujo, who has seen art trends come and go. "The market is just as buoyant as it could be."

Confident that art sales will survive the gyrations of the economy, Sujo said the latest "Liz" buyer will most likely "put it back in the houses" and make another profit.

"That's a clever fellow," she said.

Still, said Sujo, it is "scarcity" that dictates the value of great works of art. "Quality is important, but scarcity is all powerful."

Tuesday's auction saw strong prices for some artists, including Mark Rothko's "Red, Blue, Orange" from 1955. That sold the same night for $34.4 million, above its presale estimate of $30 million and the second-best price for a Rothko at auction.

"I can remember when [Warhol's] Campbell's Soup cans sold at Sotheby's for $65,000, and people were aghast at the price," said art adviser Selkowitz. "Little did we know that it could go much higher. As someone said today in the papers, '$10,000 is the new million.'"

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