The prices are 100% based on completed sale prices (not unsold listing prices). There has been no manual effort in dictating the valuation. If people are willing to pay a higher price, the level at which the yellow/red prices start to show warnings will increase. The colors only indicate that the price is higher than what the item typically actually trades for. If you feel like a price is worth paying when it's yellow or even red, there's nothing stopping you.
We may have to do some adjustment to lower-priced items to give them a higher acceptable range before showing yellow, but these colors follow the price, not dictate it.