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You can list it at whatever price you want. I think #3 of what ptiemann is the possibility.
OR
possibility #4:
They simply did that based on their own expected value, thier own hopeful idea.
I saw something like this couple times. This usually happened to better houses in the area. They think their house should value more than others because theirs are better. It is true though, this didn't work well for them because the market is not with them, and everybody was looking for smaller homes.
Further reinforcing Patrick's recommendation its still a bad time to buy a house. I think I will wait until no one wants them.
househunt == realtwhore(TM),
trying to spread FUD (Fear, Uncertainty, Doubt) about prices that have STILL not reached he bottom.
previous listing listed in Dec 2009
http://www.zillow.com/homedetails/4829-Michelle-Way-Union-City-CA-94587/25001149_zpid/
New listing
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?index=0&source=CAMAXMLS&cKey=gs83z9v2&page=1&listing_num=40444998&numResults=1
Has the housing market gone up so much in such a short time. Wow
#housing