It was standing room only inside and outside the Lincoln Theatre last night, but the hubbub had nothing to do with music, unless you count the melody one hears when one qualifies to become a homeowner.

At least 2,000 people lined up to attend the biggest housing lottery in 12 years of a program to reclaim abandoned properties in some of the District's most dilapidated areas. The proceedings were delayed more than an hour as the 1,200-seat theater filled to capacity and as city officials found themselves still facing a parade that wrapped around the block.

"We are frankly astounded" by the interest in properties that are "literally rat's nests . . . eyesores," Mayor Anthony A. Williams (D) told the audience.

The lottery's prizes: 68 boarded-up buildings being offered in most cases for $250 and a pledge to renovate them to code and live in them for five years.

"I am so nervous I am shaking," said the first winner, Karinne Kennedy, after striding to the podium amid flashing cameras and a burst of applause from the crowd.

"I always wanted to own my own home, but when I looked at it and saw it was an investment property, I looked at it as something you can pass on to your children," said Kennedy, a single mother of two.

Williams credited the interest in the housing lottery to new confidence in the city and its future. He pledged that the properties, which his administration persuaded the U.S. Department of Housing and Urban Development to release from its public housing rolls, will be part of an effort "to make a dramatic upturn in home ownership in our city . . . to make Washington, D.C., number one in the production of home ownership."

Many of the 68 properties, including a few small apartment buildings, have been vacant for more than a decade, with the exception of occasional visits by drug dealers, prostitutes and the homeless.

The mostly three- and four-bedroom houses are scattered across the city but are concentrated in the 14th and U street area in Northwest, which is now a center of gentrification and real estate speculation, and along H Street in Northeast. Most of the properties have died hard deaths twice--in the 1968 riots and again in the '80s and '90s as failed public housing.

District Homestead Program officials had known the attendance at last night's event would set a record--the city had sent out more than 15,000 applications, and 2,500 people had met the criteria to participate. By 9 p.m., the hundreds of people waiting outside had gotten into the theater as would-be homeowners left after they did not win the properties they had sought.

The number of properties offered was also a record, according to Lynn C. French, housing program administrator for the city's Department of Housing and Community Development.

French, along with city public housing receiver David Gilmore and D.C. Council member Charlene Drew Jarvis (D-Ward 4), applauded Williams for what French called the "breakthrough pace" in winning HUD's permission to sell the properties. French said HUD's action on the city's request took only five months and was "unprecedented."

The properties could not be sold until the city persuaded HUD to change its three-decades-old requirement that every closed public housing unit be replaced with another, French said.

In addition to the 68 properties, 24 properties have been released to the D.C. Housing Authority for sale directly to public housing tenants. Seventy-eight others will go to a consortium of nonprofit groups that has started to renovate and sell them. An additional 94 units will be available next year.

Kennedy, the evening's first winner, was given the right to obtain financing to buy 1920 15th St. SE in Anacostia, a four-unit apartment building.

"As a single mother, I could see I probably would end up working for the rest of my life," said Kennedy, who recently moved from the District to Maryland. "But as long as I take care of my building and take care of my tenants, I will be set."

Dalphine Townsend, a mother of three, whooped and hollered when her name was drawn for 5032 Benning Rd. SE.

"I just want to move out from public housing," said Townsend, who works for the city housing department. "I want my own home. I am tired of public housing."

French said the city will try to complete the sales by Sept. 30. A winner and three runners-up were drawn for each property in case of financing problems.

In past years, the lottery generally attracted low-income buyers "because of the locations of the property," French said, but this year's event attracted more people with higher incomes because of the Columbia Heights properties included and the sizes of the homes, she said. It was also the first time the lottery was open to people living outside the District.

"These are the houses--and I live in Columbia Heights and there are two on my block--that people have been coveting for years," she said. "They're like an urban myth. . . . They are six-bedroom houses built on a very grand scale, with wide front stairs and back stairs. And a lot of people want them."

CAPTION: Thousands of people waited in line at Lincoln Theatre for a chance to get one of 68 boarded-up properties in the city's housing lottery.