Indeed, there is bubble like you would not believe in the SF Bay Area. Things are slowing down. Houses are staying on the market longer. Prices are being cut in certain areas. It's a matter of time before a correction sets in.
Speaking of ARMS. I had one the first year. I just re-fi'd to a seven year fixed. Just to give you an idea of my personal ARM situation: In June 2004, my I/O payment was $1375.00. In July 2005, it was $1750.00. I don't know how others with 1mil dollar ARMS are coping right now. Yes, I said 1 million. My best friend is mortgage broker and routinely does I/O for 1mil +