You can DEFINATELY get a new 05 WRX for 22,000. I would sell you one for that, as I'm sure several other dealers on here would.

many people base what they're asking for a used car on what they owe. The logic is simple. I bought it 7 months ago, and got a good deal, and I've been making payments, so I should be able to get out of it for what I owe.
Obviously forgetting that the 7 payments MAYBE covers the tax and fees on the car, and some of the interest that's accrued, leaving you owing almost exactly what you paid for it, and also forgetting that there's a rebate & special financing going on.

KBB is a guide. It uses computer algorithms that do an excellent job for the average trade in (3-6 years old, 30-75,000 miles), but tends to be flaky at the fringes.
Consider sources like KBB and Edmunds (and even sometimes NADA) to be like the weatherman. They're right just often enough to get everyone to pay attention, then they're wrong when it really matters. Manheim is the only truly accurate assesment tool, and even then it's difficult because it only approximates the condition a car was in when it went throgh, and can be very prone to geographical variation.
Subarus hold their value pretty well, and not a lot of people are getting rid of WRX's. A fair price to pay for an 04 would be 19's somewhere, depending on miles, features, and conditions, maybe a little or lower. Its up to you whether you feel that $3K justifies the model year and the fact that it's a used car. It's also up to this guy to ask whatever he wants for his car. In 3 months or so, when nobody's bought it, he'll get smart. Or maybe he'll find someone retarded that's willing to give him 22K.