A test of the market for luxury houses here -- in an area where $300,000 dwellings are no longer uncommon -- is taking place in the Reservoir-Foxhall roads area west of Georgetown.

The Robert T. Foley Co. has built 21 Georgian-style houses there in an area called Foxhall Terrace. The houses have been priced for sale from just under $600,000 to $695,000.

The 3.2-acre site is bounded by Foxhall and Reservoir roads, Salem Lane and Charleston Terrace NW.

Foley, whose firm has built moderately priced town houses in Gaithersburg, rental apartments north of Wheaton and condominium apartments in Olney, says that the cost of the land dictated the high prices of the Foxhall Terrace houses. Land costs topped $100,000 for each house, he said, because his company had to "move a lot of dirt to make the site planning work."

Prices of some newly offered detached houses and town houses at nearby locations range from nearly $300,000 to $500,000. New houses also are for sale for more than $600,000 in Georgetown and on Chain Bridge Road NW, but the Reservoir-Foxhall homes constitute the largest planned group of luxury homes to come on the market.

Foxhall Terrace is on high ground, and some of the houses have views of the Washington monument. The views are "one reason why we went with mostly vertical houses," said Foley, who is building his own home there on a double lot.

The most expensive of the group, a five-story brick residence, has an elevator, dumb waiters and a surveillance system. A slightly smaller model next door is being offered for $670,000. Eleven others, on the lower side of the sloping site, will be priced just under $600,000.

In most of the new houses, the main entrance, front-to-back living room and den are on the third floor. A master bedroom, with his-and-hers bathrooms and a small kitchen, is on the fourth floor. The fifth floor has two bedrooms and a small suite for a live-in maid.

Buyers may request jacuzzi baths with insulated marble masonry walls, three or more fireplaces with marble hearths, six-panel wood doors, hardwood oak flooring, skylights and tiny, heated pools with decks over two-car garages.

Architect Alan Lockman, whose firm designed the houses, said that the alley entrance to two-car garages in back of the houses "will actually be a mews, with privacy from the substantial brick and wood fences."

Lockman's firm also designed The Cloisters and Hillandale town houses being built nearby.

The landscaping was designed by Gordon Riggle, who used ground cover plants, lighting and small trees on the front-to-back slope.

Foley acknowledges that there has been a slowdown in almost all areas of new-home sales here since interest rates began to rise again. But he is optimistic that he can sell six or seven of his houses, which are among the most expensive in the area, each year.

Real estate agents tend to believe that anything worthwhile at almost any price will sell in Georgetown. Houses over $500,000 have been sold in recent months in the Potomac area of Montgomery County and along the Potomac River in Northern Virginia.

"Will Bob Foley's houses sell at those high prices? I certainly hope so," said Samuel Pardoe, who built some of this city's most expensive, speculative houses in the late 1960s and early 1970s.

Nearby, older houses are selling for well over $200,000, Pardoe noted. "Even those little Burleith town houses are now reselling in the $125,000 range and those bigger, older attached Foxhall Village town houses -- they could be bought for less than $35,000 18 years ago -- are now reselling in the $175,000 range," he said.

Real estate brokers were invited to see the by-appointment-only houses last weekend.

One broker, Griff Holland of District-Maryland Realty, said the first two houses were "unique and well done," and predicted that some would appeal to people with "foreign money."