So theoretically, if you believe that interest rates are only going to go up temporarily before going back down, and if you believe that home prices will not fall dramatically before your term is up, then an ARM is a logical choice to make. Those are two big assumptions, but not unreasonable.
Housing prices are driven by a large housing shortage, and it isn't likely to be alleviated in the next five years, so while they might fall some, there's a good chance that they won't fall that much.
However, this does introduce more risk into the system and from a policy level, we need to have a plan in place if it all falls apart again.