It basically was a chain reaction in the hot markets. Rates got so low it brought in more and more buyers, then speculators then at a point I imagine property out west got so out of hand that people would not have been able to get in the house without an arm. You also have to figure that if you bought a house in 2003/04 in these markets you were probly up 100% by early 05. I'm sure that gave people confidence that even if the rate went up they could just sell at a profit.
Not everywhere experienced this though. In western ny here property really hasn't gone up much at all. a starter home out west is 500k, that puts you in the biggest houses around here.
i wish i had bookmarked it but i found a double wide trailer for 200k on here a few weeks ago
http://www.seattlepowersearch.com/
Most arms were 5 years, considering the big buying spree didnt happen until 03/04 we havent even started the resets yet.