Acinonyx, Sheepslayer & Kitariki all more or less have the right of it. Game is stagnating with a lack of consistent updates since launch; a lot of players are going into "wait and see" mode to see if the game can improve (and so are focused less on breeding projects), and without any incentives to release excess wolves, like every other pet site that has existed for the last decade+, there isn't really anything encouraging a healthy flea market turn over. :P
I have seen user raffles that are trying very hard to function as a stopgap measure, and that's been very admirable to see & should be encouraged! But it can't replace active game mechanic changes and improvements, unfortunately.
It's also why people are preferring to use FR gems over LW's own native premium currency for buying on the site itself. People see FR gems as more of a safe & useful investment even if they aren't liquidating and leaving, despite how many moonstones it takes to max profession slots & dens (and how difficult it is to fulfill those as a FTP player before you get bored, unless you make CA's). It's a kind of self-perpetuating issue, but you can't really blame people for it, it just makes the most sense with the state of things.
---
That said, a lot of wolves are also overpriced and probably will continue to be for a while-- usually in these pet games, the mean general price of your "fodder" will rest somewhere near (+ or - varies) whatever benefits you can get for releasing them, which isn't very high for wolves here... More uncommon color combos that are also attractive can usually sell for more, with the caveat that it can be more profitable in the long run to release dogs that don't sell in a timely fashion yourself, rather than letting them go for a pittance and thus increase the likelihood that they become more common faster. That really only works in the beginning eras of games like these, as nothing will be uncommon forever provided there is enough churn! I could see it being a more prolonged period on LW, but that is countered by a smaller buying market & breeder's patience/lack of space.