An appreciation of historic preservation and an accommodation for growth moving north from metropolitan Washington have been melded to provide steady, if unspectacular, real estate vitality in Frederick and surrounding Frederick County.

"It's not cosmopolitan but it's certainly pleasant - especially if you like to play tennis; there are so many public courts," said Sally Higinbotham, 24, assistant county planner and a transplanted Bethesdan. "And it's considerably less expensive to rent a nice apartment intown. (A large two-bed-room unit without air conditioning can be shared for $300 a month.)

Higinbotham pointed out that the county had 1,775 dwelling occupancy permits in 1978 after a plunge to 653 in 1973 and an all - time high of 1,798 in 1973. Six hundred new units were built in the city last year, and a number of fine old town houses were restored. Most Washingtonians would see a mini - Georgetown comparison in several attractive center city locations.

Bank President Nevin Miller lives in an apartment over a rival bank building in the heart of the small city (pop. 30,900) at Patrick and Market streets. "I walk across the street to go to work, and I like that," said Miller. A Frederick native, he sees the city as having switched its major orientation from Baltimore to Washington.

Miller estimated that 8,000 persons leave the Frederick area five days a week to work in the upper metropolitan Washington area, particularly on the Interstate 270 corridor - Rockville, Gaithersburg and Bethesda. He listed five shopping centers (including the newly opened Francis Scott Key) in the area and a resurgence of small, specialty shops intown.

But Miller and other Fredericktowners still fear normally somnolent Carroll Creek that winds through the city on east - west line. Will it be backed up again from a flooded Monoacy River and spread as it last did in October 1976?

Miller also frets about inflation and points out that banks need more deposits to make more loans. This not - a - bit - stuffy banker also would like to see Frederick's industrial base broadened and expanded to take advantage of its location at the crossing of Rtes. 270 and 70. The agricultural base is strong, with an emphasis on dairy farming and land now running $1,000 to $3,000 an acre, considered high for grazing playgrounds.

Most civic realty leaders agree with Miller that Frederick has become more of a "bedroom community" in recent years because of a spillover of families and persons moving northward to escape higher Montgomery County house prices and taxes. Prices are generally 10 to 20 percent less for both new and resales houses in and around Frederick. But the market gas been so strong that subdivision branches of four big Washington - based building firms have more than a dozen home sites active in the area. And several Washington area realty firms now have offices in Frederick.

Mayor Ronald N. Young, 38, now into his second term, sets the mood for the upbeat side of Frederick preservation and new growth by proclaiming that his city is the "second or third" faster grower in the state. He noted that there are nine new housing subdivisions within the city limits and that there is water and sewer service capacity to serve double the present population.

Young admited that the rules for the downtown historic district have been controversial but that stores have been fixing up and old row houses brought back into usefulness with some charm. A large new courthouse is coming out of the ground near the restored Weinberg Center, a former movie theater (the Tivoli) that now fills its 1,180 seats for major live entertainments from Count Basie to ballet. The mayor views that 1980s as significantly pregnant for even more intown rehabilitation.

Howeever, Young is concerned about sprawl out - side the city, and he sees the need for better city - county cooperation. As usual in these small county - city situations throughout the U.S., taxes are less out - side city limits.

One of Frederick's newest entries in housing development is Crestwood Village, planned as a large community for mature persons (Story on E20, photo on E21). The fairly small, semi - detached and clustered houses come wrapped in a major amenity package despite the relatively low price range. The newly opened models have attracted lookers and buyers from Washington as well as northern Virginia and southern Pennsylvania.

Tom Grunwell, widely know morning radio man and station executive of WFMD, is a transplant who likes the city and county because they are not over - crowded. He also knows about real estate. The $75,000 - range house that Ausherman Construction Co. completed for Grunwell's family of nine two years ago now would bring almost $100,000, he estimated. He lives three miles from his office, and his property tax bill is "around $600."

But Grunwell is concerned that Frederick might become another Gaithersburg or Rockville by 1990. His view is not shared by realtor Tom Folliard, who manages the Wolfe, Matan, Sheehan office in a coming - back, semi - residential section of W. Patrick Street.

"Sure, Frederick attracts people from upper Montgomery County. One reason is that it already has a real sense of small - city charm mingled with change and growth," said Folliard, who reverses the usual procedure by commuting to Frederick towork from upper Montgomery County. "I had the home before the job and it doesn't hinder my interests in Frederick civic affairs," he added.

From Tom Mills, editor of the Frederick Post, comes a report that circulation has been growing steadily. But the growth of the city itself is an issue. Mills contends that the downtown is the key to Frederick's future but that rules imposed on the historic district "could help or backfire." As a relative newcomer to the city, he endorses a lifestyle that includes friendliness, personal interests, a 30 - park system and several colleges.

Rodney Rippeon, president of the Frederick County Board of Realtors this year, finds the major resale market in the $40,000 - $60,000 range but with the average price now moving up to nearly $60,000. Some old federal town houses needing work can be had intown for $40,000, and some fine older houses near Hood College now bring as much as $190,000. But that market is thin.

The beautiful Middletown Valley west of Frederick long has attracted Washingtonians, Rippeon said that Endicott Peabody, a former governor of Massachusetts, recently bought a house in little Burkittsville. Rippeon would like to have an IBM in Frederick to broaden the employment base. Unemployment is only about 6 percent.

The realtor president also said that Frederick has not had a claim of racial discrimination in home selling and that the fair housing doctrine is widely accepted and practised.

In terms of new single - house and town house construction, the Ryland Group has been a leader in Frederick, accounting for 150 settlements in 1978 and anticpating 200 in 1979. George Middleton, the sales manager, said that the same houses would be priced $10,000 - 12,000 higher at comparable Ryland sites in Montgomery County. Other Washington area builders activce in Frederick are Pulte, Ryan, Washington Homes and James Cafritz.

A family member of Ausherman Construction Co., which builds 80 to 100 new houses in good years, said its custom dwellings range from $70,000 to $250,000. "Well build from a client's plan or idea and do it on his land or ours," said Marvin Ausherman, who handles sales. Like others interviewed for this story, he cited "nice, steady growth."

While there is uneasiness about the effects of a shortage of gasoline on additional commuter - based residential development in the Frederick area, Middleton pointed out that train service out of little Brunswick may become even more attractive to persons commuting into downtown Washington, where Metro connections are available at Union Station.

No appraisal of Frederick real estate can omit the city's historical tradition. The old courthouse square was the site of the first official repudiation of the British Stamp Act on Nov. 23, 1765. Captured Hessian soldiers were detained in a barracks that now is part of the recently expanded and improved Maryland School for the Deaf. And, of course, there's Barbara Fritchie house and museum to preserve the lore of the Unionist who was the subject of a stirring poem by John Greenleaf Whittier.

Frederick residents hope for passage of a bill introduced recently in Congress to bring a grant of $200,000 to repay the city for that amount given to Confederate forces (Gen. Jubal Early) on July 9, 1864, to preserve occupied Frederick from burning. A plaque at city hall tells the story.

But Frederick's emerging residential real estate story continutes to be written in a mixed atmosphere. There's some anxiety about change, some infusion of new spirit generated by new residents and some sense of pride in growth related "Washington spillover."

One finds a nice easy pace in downtown Frederick, where people walk the streets or just sort of stand around. The Market-Patrick intersection seems more than the actual 40 miles from Connecticut and K in Washington. And there's far more rejuvenation and restoration than new office building development.

The long-closed Francis Scott Key Hotel in midtown is nearly ready for senior citizen occupancy. The Evangelical Reformed Church picked up the 52-year-old property that had gone begging once the intown hotel's viability declined after World War II. Now there's some excitement generated by a new low-slung, atrium-styled Shearton next to the new Key mall, where 270 joins 70N and 40.

If you haven't looked around Frederick for a decade or more, you'll probably still recognize the place but be pleasantly surprised by signs of reawakening.

Frederick's mayor concedes a "bedroom community" label but insists it doesn't equate with sleepiness in a city whose assets include a campus-like high school and a citation from the Downtown Residential and Development Center as one of the five (and the smallest of all) cities doing fine work inhistoric preservation. CAPTION: Picture 1, An older house near Hood College, Photos by Larry Morris - The Washington Post; Picture 2, houses in Hillcrest Orchards, which is west of Frederick.