Massachusetts Heights, with its silent wooded hillsides and flowing brooks, is a velvet pocket of countryside tucked against the granite heart of downtown Washington.

The Heights, lives up to its name: the average real estate assessment the city sent to residents last week exceeded $200,000, a District of Columbia record. Moreover, the average house there sold last year for about $350,000, making the Heights the most expensive neighborhood in Washington.

But, Massachusetts Heights is the sort of neighborhood where if you have to ask how much it costs, you can't afford it. Still, the new tax assessments are causing a noticeable rise in some residents' eyebrows.

"The suburbs are looking better all the time," said Linda Laganas, wife of restaurant owner Peter Laganas. Fifteen years ago, the Laganases paid $54,000 for their roomy three bedroom home on a corner lot on Cleveland Avenue and put an equal amount into remodeling, she said. Now it might be assessed at double that or more.

The Laganases' daughter, Christa, 10, on her way to a ballet lesson, said that she is definitely encouraging her parents to move to the suburbs. Except for a couple of friends at the Australian Embassy across the street, she said, there are virtually no playmates her age around.

"It's not necessarily a question of whether you are wealthy enough to afford the rising taxes," Mrs. Lagunas said. "For a lot of people, it's the principle of the thing."

A number of longtime residents who settled in the Heights when the neighborhood was still literally way out of town are now on fixed retirement incomes and find the costs of inflated affluence more troublesome. "I just cant afford to keep this big old place in any kind of condition, much less pay these taxes," said a widow who has lived on Garfield Avenue for three decades. "It's very sad, but I may have to get a condominium."

At many addresses, however, Massachusetts Heights harbors a world where, during the day, uniformed chauffeurs, gardeners or maids answer the door bells; a world of authentic oriental rugs, pre-Columbian pots, guard dogs, guard fences and guards.

Diplomats, lawyers, doctors, members of Congress, retired military officers, realtors, newspaper executives -- a "nice democratic mix" -- are among those who call the neighborhood home, neighbors say. Some residents divide their time among a home here and two or three others scattered around the world.

One estate in the area would sell for almost $2 million today, according to real estate experts, and another recently sold for $700,000.

Many of the homes were built before the Depression by the colorful English immigrant Harry Wardman, "builder of homes for gentle folk," according to real estate broker Sheila Sansoucy.

Once known as the "colossus" of Washington real estate. Wardman had a penchant for an elegance that he once described in an ad as "uncompromisingly exclusive."

The ranks of hillside mansions are the view the vice presidentsees from the front windows of his official estate on Massachusetts Avenue on the fringes of Embassy Row. Some of the fortress-like homes are so imposing that they might be mistaken for embassies.

One such brick bastion overlooking a swath of graceful trees and open space belongs to the president of a Washington construction company, whose chauffeur, Nutley Hewitt, answered the door. Hewitt estimated the house has "probably 15 rooms, counting dressing rooms, plus a lot of hallways."

The owner of the house, reached later by phone, said he had bought the lot in 1961, 15 years before he built the house. He likes the neighborhood "because it's so convenient." He asked that he not be named because he feared publicity might encourage a burglary of the house.

Some residents, of course, have a vested interest in continuing inflation. "We had no illusions. Foreseeing inflation made it possible for us to afford this house," said sculptor Alfredo Halegua who, with his wife, is remodeling a 19-room mansion on 30th Street NW, set on the summit of a wooded park. "The house payments stay the same, and become easier to afford."

In any case, there aren't enough mansions to satisfy the demand, real estate specialists report.

"Montgomery taxes still outstrip us, proportionately, said realtor Etta Richwine, who lives in Massachusetts Heights.

"We can sell these homes without advertising; we have waiting lists for them," said Sansoucy, a broker for CBS Realty. "Today, $250,000 is nothing." CAPTION: Picture, One home in Massachusetts Heights where prices can start at $350,000 and assessments average $200,000. By Gerald Martineau -- The Washington Post; Map, no caption, By Richard Furno -- The Washington Post