Appers to be a circa 1985 Ital Sport on which the buyer is trying to recoup his full, original investment.
I bet that he could find a buyer at the $400 level here in Chicago on CL. And, given that it's been fully overhauled and appears to be pretty mint, that price seems fair to me.
I, myself, wouldn't pay more than $275, but I don't really need that bike. But, someone really looking for a mid-level vintage bike (newb collector or someone looking for a rainy day rider/commuter) might jump at the chance to pick that up. It's still a bargain compared to what you'd pay for a new bike.
I grow old, I grow old. I shall wear the bottoms of my trousers rolled.