I think all that optimism will just make things worse. If people think that their home price will continue to increase then there is no motivation to save or prepare for the adjusting ARM. If they think that when the ARM resets they can just refiance because their house will be worth more, they will be in for a big surprise. If they had any clue they should start preparing for higher payments or even consider selling now before prices fall even more.
It’s usually good to be optimistic, but in this case, it’s just going to make things much more painful.