A lot of people here have never experienced anything *but* a hot market. I talk to people all the time who assume home prices will keep rising forever. It's not quite as crazy as 2006 or so, but still plenty of irrational folks are out there.
House down the street from us (1980s construction) sold this summer for $800k or so. The house across the street (literally 50 feet away) with the same view, same size, same amenities, similar updates/upkeep, but constructed in the 90s just listed for $1.3 million. Hilarious. I mean, a 10-15 year newer house is great. It's not a half million bucks of great. It will sit for a year and maybe eventually they'll get $900k for it if they're really lucky.
I spoke briefly with the sellers and they said "well, houses like this sold for a million bucks last spring, so we added 30% to that." Good luck with that, folks...
AR is right, if your market is not actually hot, you need to price aggressively. I can't say whether your particular market is, but I'm betting it's not at this point.
-W