Raymond Garcia and his wife, Fruzsina Harsanyi, were driving down Corcoran Street NW near 14th Street one winter afternoon last year when - suddenly - they saw the house they wanted to buy.

It was everything they wanted - a location close enough to Garcia's job as an international trade lobby vice president so he could walk to work; a tiny yard just big enough for the Japanese holly and jumbo azaleas he and his wife wanted to plant. And the "pizzazz" they were after: two brick doorway arches, a skylight in one of the bathrooms and high ceilings overlooking hardwood floors.

The price of the rowhouse, not yet completely restored and very near an area of 14th Street burned in the 1968 riots, was $98,000.

"We took it," Garcia said.

Only a few before Garcia and Harsanyi happened on their dream house, few white or middle-class blacks would have dared to walk down Corcoran near 14th Street.

While some well-to-do black families had lived there for decades, among their neighbors on what was for many years called "stab alley," were pimps, whores, drug addicts, thieves and numbers runners. The aging houses were grimy, dilapidated or, like the hosue the couple bought in the 1400 block of Corcoran, empty, trash-strewn shells.

But something has been happening in inner-city streets, such as Corcoran, in Washington and throughout the country. More and more people are spurning the suburbs and long commutes into the city to jobs for the advantages they see in the close-in location and basically attractive townhouses in the inner city.

Intrigued by the idea of becoming 20th century "pioneers," people of all ages, incomes and professions are snapping up old houses and remodelling them. Slowly but inexorably, from Corcoran Street and the Adams-Morgan and Mount Pleasant neighborhoods near it, eastwars to RFK stadium, they are changing the face of the city.

Their impact can be seen in the price of city housing. About four year ago, the Garcia house on Corcoran Street was sold at a tax delinquency sale for about $700, according to a former owner of the house. In quick succession, two owners each cleaned out the trash and resold the shell at steadily increasing prices before it was finally bought, partially restored and sold to Garcia and Harsanyi for $98,000.

In one section of Mount Pleasant, a home in the 1700 block of Lanier Place that sold for $65,0000 in March 1976, ws resold 20 months later for $112,000, according to D.C. tax records. A house in the 1300 block of Q Street, NW that sold for $22,500 in September 1974, and was resold for $35,000 in February 1977, was purchased for $105,000 11 months later.

It is happening all across the city. During the past two years, the price of a home in nine of the city's 56 neighborhoods has increase has exceded 60 percent. The median price neighborhoods has increased by at least 50 percent, and in five of those nine the increase has exceded 60 percent. The medican price of a home in 22 neighborhoods was more than $90,000 last year.

According to Dr. James Burns, who has studied the city's housing crisis for nine months as senior research associate for the city's legislative Commission on Housing, persons such as Garcia and Harsanyi who are buying they rundown housing often are already residents of the city. Burns believes the city is not being mobbed by suburbanites.

Singles and young couples in the city "are not having children in great numbers," he said. "Many of them are 'pooling' or taking roommates. That means they have more to spend on housing because they can split the cost. The market responds to their demands rather than to the demands of conventional families, and the cost of housing goes up even further."

Interviews with more than 30 people who either live or own property in the 1400 block of Corcoran Street, for instance show that most of the newcomers are white and in their late 20s and 30s.

Bob Arrington, 37, who works in the Air Force's foreign military sales division, paid $84,000 for his Corcoran Street home and moved there last February from Arlington. Now, Arrington said, he can walk to art galleries and sidewalk cafes. "It's like living in the large cities of Europe. There is an avalanche of bells from six churches on Sunday morning. They're beautiful," he said.

Lyn Spier, 36, who works for the American Chemical Society, owns two houses on the block and lives in one of them. He walks to work. "I don't go on 14th Street too much, but it really doesn't bother me," he said.

Corcoran Street renters include Reginald Collins, 28, a black law student, and his roommate, Brenda Gardner, 23, a black accountant. They moved there nine months ago, they said, because they wanted brick walls, a fireplace and a patio. They rent two floors of a three-storey house for $450 a month plus utilities. Most homes on the block include ground-floor, one-bedroom units that the homeowners rent out, according to interviews.

Other homeowners and renters in the block include several lawyers, two teachers, a legal secretary, a doctor, another accountant, a former Carter campaign worker, a Garfinckel's official, a chef, an interior designer, a bank employe, a management analyst and a woman who heads an all-women painting company. Nearly all of those interviewed have no children.

They live in tastefully furnished houses, with baby grand pianos, teak-wood cabinets, hanging plants and expensive chandeliers. They walk their Russian wolfhounds and doberman pinschers on new sidewalks. They said they moved to Corcoran Street to be close to jobs, theaters, museums and shopping on Connecticut Avenue, and because such convenience, and fire-places and brick walls are more important to them than large yards and detached houses.

These Corcoran Street residents resemble in many ways their counterparts in Mount Pleasant and on Capitol Hill, two other areas undergoing transformation, according to two studies conducted by Professor Dennis E. Gale of George Washington University's department of urban and regional planning.

His study of Mount Pleasant found that most of the new households were composed of white singles and childless couples in their late 20s and 30s who earned between $15,000 and $50,000 a year and who had moved from elsewhere in the city.

Most had graduate degrees, and most had at least partly renovated their new homes themselves. They bought homes in Mount Pleasant because they felt their investment would grow in value, the price was reasonable, the house was near their jobs and they likes the historical and architectural character of the neighborhood and its racial mix.

They said their most annoying problems are crimes and inadequate parking space. Most households had been burglarized or vandalized.

In studying two Capitol Hill tracts, Gale and his students found that families there generally had bought homes after someone else had done the restoration work.

As on Corcoran Street, sections of Mount Pleasant and Capitol Hill were home to the black and poor until quite recently. About two-thirds of new Hill residents and most of those in the Mount Pleasant survey said they had been victims of at least one crime or threatening gesture.

Racial problems are not frequent, according to most Hill residents surveyed. Interviews with the Corcoran Street residents showed the same feeling.

On Corcoran Street, Fruzsina Harsanyi recalled "a drunk who used to walk up the street, yelling 'Kill whitey'."

Harsanyi, director of government relations for a multinational corporation, said: "A black architect on the block explained to us that it wasn't a racist comment, that the drunk's anger also was directed at him.

"I told him it wasn't the 'whitey' part that bothered me, it was the 'kill' part. But the drunk later became our friend," she said.

About half of the Capitol Hill residents surveyed said they would like their neighborhood to be composed almost equally of whites and blacks while one-fourth wanted a predominance of whites. Most of the others said they had no racial preferences but would rather have neighbors whose socioeconomic backgrounds were comparable to their own.

Gale concluded that Mount Pleasant and Capitol Hill home buyers, by choosing to live in the city, expressed a "subtle" statement about their values, which he contends were nurtured in the late 1960s in reaction to the civil rights struggle and concern for declining inner cities. Most of the new residents, he noted, were college educated and have been exposed to urban sociology and related fields that sometimes emphasize the cities' plight and the bland of anonymity of some suburbs, he said.

On Corcoran Street, according to Margery Farhat, a retired teacher who lived in the 1400 blocks since she was a girl in 1924, the current transformation has made it "like another world."

In 1924, the 1400 block was home for established black teachers and ministers. By about 1940, many of the middle-class black owners had died, moved away or found it impossible to maintain the huge, three-storey rowhouses.

Many of the homes then became rooming houses for the poor. Slumlords and speculators pounced and by the late 1960s, some of the homes eventually were reduced to nothing more than shells filled with trash.

When Garcia and Harsanyi moved into their hosue, the transformation was just beginning. Directly across the street was a house that provided regular entertainment each Sunday afternoon when the police held a weekly raid seeking prostitutes, Harsanyi said.

"We'd have very sophisticated friends over for dinner parties, and they were glued to the windows, watching our red-light district across the street," Harsanyi said.

That infamous house has been restored and painted and was sold last January for $115,000 to Brian Miles, 32, a physician, and his wife, Connie, a sales agent for Pan American Airlines. Soon after they had moved in Miles said, one prostitute who apparently had done business at the house arrived unannounced.

"She said she wanted to see how the house had changed. I let her in, showed her around. She said she was pleased," Miles said.

Corcoran Street properties became valuable as memories of the riots faded, according to Stephen Mowbray, 32. He is a realtor and a broker whose firm has sold in the last two years between $5 million and $6 million worth of property in the Logan Circle area, which includes Concoran Street. Some rebuilding had begun there just before the riots, which ended such efforts for many years.

"By 1974, properties got so expensive people started looking east of 15th Street again and realized they had missed the forest for the trees," Mowbray said. "They realized they had been looking at derelicts, winos, junkies and hookers and had closed their eyes to the location and the architectural value of the house.

Burns, the housing commission's senior research associate, said the demand for housing in the city is due primarily to the post-World War II baby boom that produced thousands of people now old enough to seek their own homes. Because affordable new housing is not readily available, he said, these people turn to existing inner-city housing that sometimes appeals to their sense of pioneering spirit and romanticism.

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Among those responsible for transforming the 1400 block is Robert B. Miller 35, a partner in an investment group, who designed and rebuilt four homes two years ago. The group bought the hosues for an average of $22,500 and restored them for about $56,000 each. One was sold for $100,000 and another for $94,50.

Timing is very important, said Miller, who waited to sell the houses until tha market is improved. He noted that another builder in the area had gone bankrupt two years ago when he could not sell his house at $65,000.

When he began restoration work on Corcoran Street, Miller said, "it was like wading into a pit of crocodiles." He said that his newly office has been robbed eight times in two years, that he has been shot at three times, and that someone stole his dog and cut his throat.

While most Corcoran residents said in interviews they had experienced little crimes, some said their homes had been burglarized and one tenant said he has seen three persons mugged on the sidewalk outside his house in nine months. Almost all said they are satisfied with their new residences.

"I'm getting used to the area," said Connie Miles, who walks to work. "I'm still intimidated to go down 14th Street. It's sort of like the other side of the earth. The stories you hear about 14th Street . . . I remember seeing our friend on Q Street once chase away a pimp with a broom. Sometimes people scream obscenities through the (house's) intercom, but I'm totally comfortable."

James L. Jones, 45, assistant to Mayor Walter Washington for youth advocacy, has lived in the 1400 block for 2 1/2 years. When he moved there, paying $45,000 for his house, three-fourths of the block remained "burned out" he recalled.

"I was looking for a place that I could renovate in from three to five years and live in while I was renovating it," Jones said.

"I felt that if I bought a house and made it the nicest house on the block, it wasn't important what was next door. I had the kind of attitude that my house was the oasis in the middle of the desert," he said.

hose who have had to bear the brunt of the ongoing rediscovery of the inner city are the poor and the lower-to middle-income families, particularly those with only one family members who works, researcher Burns said.

"The poor have always gotten their housing through filtration, through a "hand-me-down" process," Burns said. "They have always been able to cope, moving from old neighborhood to old neighborhood.

"But over the next 20 years, there will be nothing handed down. The poor will be squeezed out. The city will lose its rental stock to condos, coops, single-family houses. The political, economic and racial character of this city will be changed until the government intervenes. Otherwise, the city will become a Georgetown by the 2000," he said.

M. Carl Holman, president of the National Urban Coalition, believes re-vitalization of inner-city neighborhoods often creates a "new class of urban nomads" - usually tenants, the poor and elderly - who are "caught between the vise of middle-income, renovated areas and the staunchly middle-income suburbs.

John Whitfield, 27, who moved in November 1976, from the 1700 block to the 1400 block, thinks the transformation may be too complete.

Although he like the neighborhood, he said, "city noises" that he values are disappearing.

"It's just not like living in the city anymore," he said. "Many of these neighborhoods are becoming suburban".hborhoods are becoming suburban".