2. There’s too much supply
Diablo 3‘s loot tables are a mess. Blue items, supposedly uncommon, are often better than rare drops, the gold items. And gold items drop so often they’re common: Both the game-gold auction house (GGAH) and the real-money auction house (RMAH) are flooded with gold items. Legendary items, which are suppose to be extremely rare, are as you can see from the pictures, not the least bit “extremely rare”. Even the GGAH has pages and pages of legendary items.
In economic terms, an over-abundance of supply means you really don’t have a market. You’re engaged in the metaphorical equivalent of selling sand at the beach.
Tomorrow: Reason 3