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A unique sequence of Impressionist and modern sales that took place at Christie’s and Sotheby’s in London in February highlighted the paradoxical situation in which art buyers and auction houses will find themselves in coming years.

As worldwide demand grows and supplies wear ever thinner, the truly important works still available are fiercely chased and their prices go through the roof, resulting in new auction records. On the other hand, the average quality of works that once sold at the middle level slowly declines as auction houses try to fill their catalogues with enough lots to make a sale financially viable and psychologically plausible, since every auction requires a pace, a progression from pleasing or interesting works to a few that are irresistibly attractive.

View Slideshow: The Paradoxes of Penury

Since the auction houses can only offer what is made available to them, they embark on an upgrading process that quickly finds its limits.

The evening session on February 8, at Sotheby’s, and the larger and longer but unexciting Christie’s sale on February 9, revealed twin trends that seem paradoxical only to outsiders.

Rarities soared to extraordinary levels, leaving no doubt that the market for Impressionist and modern art is more bullish than it has ever been. They did so in the course of lackluster sessions, in which the mediocrity of much that was offered was striking. Although bidders were itching to buy, frequently excessive estimates, probably forced on reluctant department specialists by profit-hungry speculators threatening to withhold their consignments, doomed to failure several third-rate works and a few run-of-the-mill ones.

At Sotheby’s, where only 42 lots were on offer, the experts had placed the two pictures that were potentially most attractive to present-day buyers at the beginning of the session.

The first one was typical of the new interest in artists long relegated to the second division, if unfairly so. Lyonel Feininger is one of them. His "Raddampfer am Landungssteg" ("Side-Wheel Steamer at the Landing"), signed and dated 1912, displays the blend of Cubist stylization and Expressionist energy that characterized the pictures he painted in Germany before World War I. The wooden jetty, the steamer, and the scenery are broken up into facets. Their sharpness gives the harbor view a vibrant energy, and tiny humans bending like actors in a Lilliputian pantomime convey the painter’s playful sensibility. Feininger’s picture has an alacrity that is alien to both Cubism and Expressionism. Sotheby’s gave it a £1 million to £1.2 million ($1.6-$1.9 million) estimate. It ended up at £3.2 million ($5.1 million).

Five lots down, the star work, Picasso’s "La lecture" pointed to a different kind of upgrading taking place within the most sought-after aspects of famous artists’ oeuvres. The year 1932 is seen by some Picasso admirers as a pivotal moment for the master. They love the jarring distortions of the human faces outlined in strong curving lines and the stridently contrasted colors. With its gently sinuous contours and its lighter palette, La lecture does not quite fit the bill. It even has a touch of benign humor — the title, "Reading" in French, is belied by the closed eyes of the young woman who has fallen asleep over the book left open in her lap.

But Picasso’s 1932 pictures are hard to come by these days. Sotheby’s gave "La lecture" an estimate of £12 million to £18 million ($19.3-$29 million). Bidders ran it up to £25.2 million ($40.7 million).

The eagerness to buy anything reasonably good was highlighted by several strong prices. Matisse’s sketch of a woman lying on her back realized £735,650 ($1.2 million), an enormous amount for a work on paper that is very fine but not unforgettable. Later, a remarkable pastel portrait of a young woman by Edouard Manet probably sketched in 1882 sold for £1.6 million ($2.6 million), just under the high estimate. Given the market’s gradual disaffection with Impressionism and the fragility of the pastel medium, this price too was on the high side.

Such bouts of determined bidding went along with a fierce rejection of duds. A mediocre Renoir in the painter’s broad, rough style from his last years dropped dead without a single bid coming in to match the £2 million to £3 million ($3.1-$4.6 million) estimate. Severe price corrections allowed other works to pull through. A "Nu couché" dated October 23, 1967, in Picasso’s worst cartoon style, was expected to be knocked down between £2.5 million and £3.5 million ($3.9-$5.4 million). Instead it sold for £2.3 million ($3.7 million), 20 percent below the low estimate.

Other consignors did not get away with paintings that were better but carried "Alice in Wonderland" estimates. Alberto Giacometti’s portrait of his brother Diego, painted in 1958, wildly estimated to be worth £3 million to £5 million ($4.6-$7.7 million), dropped dead.

By the time the session ended on a £68.8 million ($111 million) score, no one could doubt that the auction scene is awash with money ready to alight on pictures deemed desirable or simply acceptable. It also became clear that consignors can no longer name their price when the offerings are miserable.

The drastic thinning down of supplies was shown to have another consequence. There happened to be just one timeless masterpiece in the entire Sotheby’s sale, a small portrait done by Picasso. Said to have been painted in 1923, it is unlike the bloated Neoclassical faces of that period. Until fairly recently, a likeness that reveals Picasso’s intimate acquaintance with the great masters of the past could have been overlooked. The tiny portrait, just 10 5/8 by 8 5/8 inches, does not scream "I am a work by Picasso" to the broader public. But on February 8, the picture sold within its ambitious estimated price bracket as it rose to £1.7 million ($2.7 million).

At Christie’s on February 9, the lessons learned the day before at Sotheby’s were underscored in a session of 76 lots, 60 of which realized nearly £85 million (over $136 million).

The opening lot, a still life of pears, grapes, and nuts by James Ensor, confirmed the art buyers’ readiness to go for beautiful works that do not fit with received ideas about an artist. Dated 1889, the picture illustrates the Belgian artist’s early manner, very different from the Symbolist-influenced style for which his oeuvre is most sought after. The tiny panel reflects the influence of French Impressionism in its brushwork, but the precise contours contrast with the blurred detail in Impressionist art and the subject, a carefully constructed still life of fruit laid on a table, ties in with the centuries-old Flemish tradition. In earlier days, a small picture so different from the works associated in the public’s mind with the painter would not have aroused much interest. In February, the picture sold for £289,250 ($464,536).

The new trend favoring great but atypical works was spectacularly illustrated by a stunning masterpiece painted in 1901 in which few would recognize the hand of young Picasso newly arrived in Paris. The close-up view of characters seated on the upper deck of an "omnibus" driven over a bridge across the Seine differs from the manner heralding Fauvism in which the master often worked around that time. The handling of the river and the houses seem to indicate that Picasso would be heading for abstraction. Actually, Picasso did not explore that avenue further. The powerful picture triggered energetic competition. Its £4.9 million ($7.8 million), price surpassed the high estimate by nearly 40 percent.

The recognition of great art, even when removed from a master’s best-known style, is a sophisticated substitution process in the face of growing scarcity. A cruder form of substitution was illustrated by two record prices at Christie’s that same night.

The first record went to Pierre Bonnard’s large "Terrasse à Vernon," signed and dated 1923. The summertime view of a landscape seen through the shimmering foliage of trees is handled in a broad, blurry Post-Impressionist style. Loosely painted, the composition is muddled, but it is one of two pictures that Bonnard dispatched to the 1923 Salon to represent his new style. Expected to fetch £3 million to £4 mil- lion, the landscape brought £7.2 million ($11.6 million), making it the most expensive Bonnard ever auctioned.

The evening’s other world record was also unexpected, albeit for different reasons. Salvador Dalí’s panel, "Etude pour ‘Le miel est plus doux que le sang,’" 1926-27, is small. However, it is one of Dalí’s earliest Surrealist pictures. Exhibited many times, it benefited from the tide currently carrying Surrealism and crested at £4 million ($6.5 million), well above the upper end of the estimate.

Interestingly, though, there was no indiscriminate bidding on Dalí’s work. A late seaside landscape of 1959, "Port Lligat au coucher du soleil," was not surreal enough to arouse bidders. The sky is, well, just a sky with real clouds. The rocky hills emerging from the sea on the horizon are very plausible. The only Surrealist touches are provided by the small characters. Two winged females tiptoe on the shore where nude men in sculptural postures inspired by ancient Roman art also appear. The Dalí sold for £1.3 million ($2 million), well below an excessively optimistic "low" estimate.

Pictures with an instant punch were great favorites. The second highest price was for André Derain’s "Bateaux à Collioure." Color explodes in this Mediterranean seaport view of 1905 where the strand is a blazing red and the sky over the horizon is an acid yellow. Few landscapes of that ilk by leading Fauves remain available. Hence the £5.8 million ($9.4 million) paid at Christie’s.

Despite the bullishness that this illustrates, here too a fierce price correction process was observed on overestimated works. "La berge du Petit-Gennevilliers," painted by Monet in 1875 with a confusing sketchiness, went for £3.7 million ($6 million), slightly above the low estimate. At Sotheby’s London in November 1989, it had cost its Japanese consignor £3.2 million ($5 million), which was too much. This year, it failed to match the 1989 price in terms of real buying power.

Matisse’s 1919 portrait of a woman seated in an armchair, in which the sitter has shapeless hands and a wooden face, narrowly missed ignominious failure only because the auctioneer, Jussi Pylkkänen, allowed it to go for just £791,650 ($1.3 million), roughly 30 percent below the low estimate.

There are always some exceptions to trends. At Christie’s a pastel of two Paris Opéra dancers drawn by Degas in 1896 illustrated the tragic loss of talent that affected the great Impressionist by the time he reached his mid-60s. The stiff legs do not relate to the bodies and the head of one of the girls seems to have been screwed on the wrong way. This did not prevent "Danseuses jupes jaunes (Deux danseuses en jaune)" from reaching £5.4 million ($8.7 million).

The day before at Sotheby’s, Paul Signac’s "Venise." "La Salute. Vert," which looks like an outsized picture postcard in the Divisionist style, miraculously managed to sell for £2.3 million ($3.7 million), well within the estimated price bracket.

But miracles do not happen in droves. At Sotheby’s 10 of the 42 lots went nowhere, and at Christie’s the casualties still numbered 16 out of 76 lots. Both houses have top-level professional teams. The failures do not reflect incompetence, but the growing number of works that stand no realistic chance of meeting estimates imposed by vendors who hope that the dearth of art will allow them to get away with overpricing.

Clinching evidence that the failures on February 8 and 9 were not related to a lack of enthusiasm among buyers came on February 10, when Sotheby’s had the good fortune of dispersing a genuine private collection, a rare event these days. A tidal wave of enthusiasm swept across the salesroom. All 60 lots sold. Those currently seen as highly important doubled and tripled high estimates.

Francis Bacon’s triptych "Three Studies for [the] Portrait of Lucian Freud," 1964, more than doubled the high estimate at £23 million ($37 million), a price made particularly remarkable by the small size of each part, only 14 by 117/8 inches.

In abrupt contrast to the failure of Alberto Giacometti’s portrait of his brother Diego two days earlier, the likeness of his wife, Annette, from 1961, shot up way above the £2 million to £3 million estimate ($3.2-4.9 million) to nearly £5 million ($7.8 million). The red touches on the cardigan and the more energetic grimace accounts in moderate part for the price. The feeling that no one was playing tricks with estimates-cum-reserves was the more decisive factor.

Two world records were set. Dalí’s portrait of the Romanian-born Surrealist poet who wrote in French under the name Paul Eluard went up to an astonishing £13.5 million ($21.7 million), more than two times the high estimate. Dating from 1929, the likeness of the man whose bust, head, and shoulders are seen floating in the sky with some nightmarish additions to establish its Surrealist credentials, has a whiff of 20th-century cultural history about it. The writer and the painter had met that year in Paris where Dalí was staying to assist Luis Buñuel, who was shooting "Un chien Andalou."

Julio González, the Catalan sculptor established in Paris where he died in 1942, is a rarefied artist whose metal shapes are austere. An iron "Masque ombre et lumière," barely identifiable as a human mask, became the most expensive González work at auction, bringing £4.6 million ($7.5 million), triple the high estimate.

The rush on presentable art propelled other works, some of which caused little excitement until very recently. That was the case with drawings by artists of the Cubist school who have been overshadowed by Braque and Picasso. A sketch in colored crayons drawn by Juan Gris around 1916 doubled the most optimistic expectations at £993,250 ($1.6 million).

A tiny self-portrait by Lucian Freud, painted in 1952 in a strictly realistic style, rose to an incredible £3.3 million ($5.3 million), nearly four times the high estimate. Offered immediately before Bacon’s preparatory triptych for a likeness of his artist friend, it was treated as an art-historical icon.

The great success of postwar art was perhaps the most striking example of the eager search for substitutes to the vanishing works adorned with world-famous names. This is particularly true of drawings, which appeal to a more limited public than paintings. Jean Fautrier’s 1962 "Dark Clouds" thus made £205,250 ($330,000), and Eduardo Chillida’s small "Untitled," an abstract composition in ink and paper collage, went up to £73,250 ($117,000), quadrupling expectations.

The lesson for all those involved in the art game is simple. The future is as bright for anything desirable according to the criteria of the day, as it is uncertain for works put up for sale with speculative intentions. Genuine and knowledgeable collectors will come out the winners. For the others, it will be Russian roulette with a difference. Victims are likely to outnumber survivors.

Souren Melikian is the international editor of Art+Auction.

"The Paradoxes of Penury" originally appeared in the April 2011 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's April 2011 Table of Contents.