It is not only ebay. I have seen listings on Reverb and vintage instrument shops that are asking crazy prices for instruments in need of serious work. Some instruments are in dumpster condition and people are hoping for a big sale just because they are old or say Martin, Kamaka or whatever. In many cases the only way to make it worthwhile would be if you have experience as a luthier. Paying for repairs could cost far more than the value of the instrument.
One thing that you will often see with the inflated prices, even if it is only an asking price and never sells, is that people then refer to those prices and use them to value other items. It becomes a crazy cycle.