Would you then be okay with a grocery store demanding you pay 5x the list price for the last gallon of milk they have because the guy who also wanted it said he would be willing to pay that much?
That's not a good example. If a supply shortage drove price that high, what choice would I have? However if the store clerk is demanding 5x asking price without basis, I'll just go to another store. That's just how supply + demand works. That house went for 782k over the asking price because it can. This isn't a case of the supplier being unreasonable.