Even during the worst of times - when mortgage rates are sky-high, subdivisions are over-built and the real estate market is sluggish - there is a continuing demand here for luxury whose offering draw the carriage trade.

People who spend more than $200,000 for a house usually come from some other part of the country, the builders say. And they pay cash.

"The market is very limited in the high-price range, but there is always a buyer for a very fine house," said Leo Patrick Cullinane, 2 Chevy Chase-based, builder.

But the whole process of building these houses is a gamble, most builders maintain. If buyers are slow to respond, the shortterm construction loan hangs over the builder's head.

"There's no way to judge how fast a house will sell," says Phillip Abraham, who, with his partner, Irving Adler, builds houses for $165,000 to $300,000 in the District. "You could sit it right away. "You make a living, but it's not lucrative and it's difficult."

Cullinane, like most of the builders who specialize in luxury houses, builds some houses to the specifications of buyers and some on speculation. He's currently working on two custom houses and one speculative house.

"You can't mass-produce this kind," he says. His houses are usually priced between $600,000 and $2 million, he said.

The key to selling luxury houses is building them well, Cullinane maintains.

"I like to make my houses look 200 years old - like they were build during the Georgian periods," he said. "That means a lot of extra work. It means that the woodwork has to be mill-made, the brick hand-made, the ceilings 10 feet high. Nothing is mass-produced."

Northern Virginia builder C.W. Sampson, who builds speculative houses in the $180,000 to $230,000 range, says most of his expensive houses sell before they are finished.

Sampson, who is building 10 luxury houses in Annandale, says he puts the money "into engineering rather than spend it on decorations. Let the people who buy the house decorate it the way they want."

"The building site has a lot to do with the sale price and how fast the house sells," Sampson said. "Most of the luxury market (in Northern Virginia) is in McLean and North Arlington."

Architect-builder Aram Normandin, who, in conjunction with achitect John Williams, is building his first speculative house on MacArthur Boulevard near Arizona Avenue NW, has found that he is having to sell the Palisades neighborhood as well as the house.

His house, a four-story contemporary flanked by smaller houses built after World War I, is priced at $325,000. It has three bedrooms and room for a doctor's suite on the ground level, an arrangement of space "that would appeal strongly to a limited market," he said.

"I may have over-built for this neigbhorhood," he acknowleged. "This house is one of the most expensive in the neighborhood and it is not conventionally built."

"But I'm in scale with the future," he said, pointing out that other expensive housing is being built nearby. In time, some of the "poorer structures" - the frame bungalows that dot the Palisades area - "will be replaced by something more substantial," Normandin predicted. "I'm breaking the ice here."

On the market since April and visited by 500 people, the house was recently reduced in price by $50,000. Most of the visitors said they liked the house but couldn't affort it, Normandin said. Some told him they would buy - if it were located in Georgetown.

Normandin has been showing the house in a nearly finished state. Other builders say they have better luck if the house is completed.

Samuel Pardoe, who is building two $500,000 town houses in the 2800 block of Q Street NW - in Georgetown - says he won't show his houses until they are finished - "down to the wallpaper in the bathrooms."

"Normally, a speculative builder won't do as much as I do to finish a house. I don't care if the people who buy it tear out all the wallpaper and put in something else. The details create a feeling in a house like this," he said. "There won't be any furniture, so the details need to be complete."

Most of the speculative builders put up houses they themselves like and then hope somebody else will share their feelings, according to Pardoe.

That's only one of the problems, other builders said.

"You have to hit the market just right," said Steven Kokes, a builder in Rockville. "During the time it takes to build a house, they money market could dry up or the government could change the interest rates."

In addition, the builders said they are caught up in increasing construction costs and a shortage of labor, both of which increase the sales price of the houses and made them harder to sell.

"It's a pretty risky business," Kokes maintains. "It can be disasterous. But it can be profitable, too, if you hit the market right.

"You have to be an incurable optimist." CAPTION: Picture 1, Aram Novmandin and the $325,000, MacArthur Boulevard NW house he built on speculation. It has been on the market since April, By Laura Levine - The Washington Post; Picture 2, Novmandin's house waits for buyer's decoration, By Laura Levine - The Washington Post