There is something else affecting the value of SMS games, sort of. It used to be that nobody cared about the system except for serious collectors, only US games were selling for real value for completionists who needed US copies for a complete collection, European copies or Canadian copies of most games were near worthless or worth around $5 complete. Now most people buying SMS games don't seem to notice a difference or care about having Euro copies, they're selling for a decent amount as well. Now that Euro copies aren't dirt cheap, nothing is holding back prices on US copies, everything is rising in price.
It's basically down to demand like everything else, it's just that with SMS games it really used to matter which versions of the games you had. Euro games were more common in Canada and those were always dirt cheap, now they're selling like US copies. People aren't noticing a difference between them anymore. It probably helps that there's no difference with the names of the console(unlike the Genesis and Mega Drive), the carts all look physically the same, and they're all just as compatible with either region as a whole.
I'm not exactly sure why people are looking more favourably towards the SMS now, the games were cheap because few people cared about the system. It used to feel like a crappy loser next to the NES. Now it's feeling more "nostalgic" than it used to. Even for me, and I used to hate it except for a select few games. It's sort of like how people are warming up to the Gamecube when it was the third place loser when it was current.