First off, no one knows what the economy in general--or housing in particular--will be like in 10 years. Even I wouldn't hazard a guess, and I'm pretty willing to make guesses about 2, 3, or 4 years out.
A few quick thoughts, though. First, in a lot of areas, that bubble's already been paid for. At least largely. Yes, prices could decline some more. They likely will in some areas, though in other areas values appear to be rising nicely. I don't expect further declines for the next 10 years.
Now, there is a problem coming up in a few years with the expiration of the extended Bush tax cuts. But that's much sooner than 10 years.
Similarly, there are major problems overseas. The Greek debt crisis, for instance. Problems in Italy, Spain, and Portugal. But those are here now. And while they'll persist for years to come, I don't see those coming to a head in 8 or 9 years.
There are problems people generally haven't recognized. The Chinese economy is slowing. It's still strong, but not as strong, and prospects are for further weakening. Watch for that to become far more noticeable in 3-5 years.
Problems in the Middle East: Israel and Iran, for instance. But the way that's going, if there's a crisis it looks like it's more like 6 months to 2 years away than 9 or 10 years from now.
The problems we'll be facing in 10 years--and, yes, I'm sure there will be some very serious problems--probably aren't even on the radar screen at the moment. Maybe Muslim uprising in the former Soviet Union. Maybe an entirely new political movement somewhere in South America. We may have a large peacekeeping force in Mexico or elsewhere in Central America. It's hard to say.
OK: Have I scared you enough? Didn't really mean to. But the point is: The world is constantly changing. Unfortunately, there will always be wars and crises.
If I'd been in your position, I'd probably have done just what you did and go with a 10/1 ARM. Really. But different people have different levels of comfort. If you "dearly wish to get rid of the house," then do so. Probably not today, since you bought so recently and just refinanced. But if that 10-year horizon worries you, set a goal of selling in, say, 5-6 years. You can't control the market, so you really don't know what the house will be worth. But have a Philadelphia Realtor you trust send you a CMA maybe every 6 months. Once the value of the property is high enough, sell.
Hope that helps.