Two years ago, the Columbia Heights area of Northwest Washington was buzzing with saws and hammers as run-down, turn-of-the-century houses throughout the 14th Street corridor north of Florida Avenue were being renovated. But today those sounds of restoration largely have been stilled by high interest rates and the sagging economy.

"It's not like the wildfire we had a couple of years ago, although there are still a few people who can afford the price range there and go in and fix up the homes," said Lyman Sale Jr., an agent with the Long & Foster real estate firm.

District records show that during the last half of 1981 only a handful of building permits were issued for rehabilitation work in Columbia Heights, work that included electrical and plumbing repairs and renovations of interiors. That contrasts with the more than a dozen properties in the 1300 block of Fairmont Street alone that were approved for renovation between the summers of 1978 and 1979.

Home sales in Columbia Heights, like elsewhere in the District, also are down. City records show 166 houses were sold from October 1980 through September 1981, almost half of the 334 sold in 1979.

But homeowners, realty agents, developers and city officials indicate that the figures only show the dormancy, not the end, of Columbia Heights' restoration movement. "You bring interest rates down to 12 percent or below, and the whole Washington market will pick up like hotcakes," Sale contends.

Renovation of Columbia Heights' three- and four-story brick and stone houses -- where top federal and District officials and upper-middleclass citizens lived in the early 1900s -- got a late start compared with other neighborhoods close to downtown.

"Columbia Heights has not been quite the 'in place,' like Mount Pleasant, Capitol Hill or Adams Morgan," said Charles Horwitz, supervisor of the District's residential assessment office. "You still have the problem of crime on 14th Street."

Another deterrent is the memory of the 1968 riot that destroyed blocks of 14th Street. "Lots of people were waiting to see what would happen here" after the riot, said Leroy Hubbard, a community activist with the Washington Churches for Social Action-St. Missionary Foundation on Irving Street. As a result, he said, many potential residents instead settled in nearby Mount Pleasant and Adams Morgan.

In the mid-1970s, as racial tensions relaxed and the other areas became saturated with renovation, restorers shifted their attention east across 16th Street into predominately black Columbia Heights. "It's one of the few close-in places left to be done," Sale said.

The newcomers typically are young, with professional jobs, attracted by the area's closeness to downtown, cheaper homes and unusual architecture, realty agents and developers say. But they point out that unlike other areas' white-only renovation, young blacks are active in Columbia Heights' restoration.

Meanwhile, the 1980 census indicates "gentrification"--the movement of young, white professionals into deteriorated neighborhoods and their renovation of houses formerly occupied by blacks or white ethnics--could be occuring in sections of Columbia Heights between Harvard Street and Florida Avenue, although the data so far is inconclusive, said Daphne Spain, a Census Bureau demographer. She has studied gentrifiaction in several cities.

In the 12 blocks bounded by Florida Avenue and Harvard, 11th and 14th streets, according to the census, the white population jumped from 69 in 1970 to 751 in 1980, while the number of blacks slid from 5,529 to 4,136. The area to the east showed a smaller increase in whites and drop in blacks, while the section to the west lost residents of both races.

The movement toward renovation has been scattered throughout Columbia Heights, in contrast to the block-by-block approach taken in the areas around Dupont and Logan circles, said James B. Cardwell, an architect who lives in the 1400 block of Chapin Street NW.

Cardwell, 38, paid $52,000 in 1978 for his then boarded-up, Victorian home and spent about $30,000 more replacing rotten plaster with dry wall, updating plumbing and electrical systems, replacing doors, renovating bathrooms and the kitchen and repairing floors. He did much of the work himself.

Since he moved in, a couple of other dilapitated buildings in the block have been rehabilitated, leaving five still boarded up. Vacant, run-down homes are common on many of the tree-lined streets, particularly University Place and Girard, Fairmont, Irving and Harvard streets, although not the dozens of a few years ago.

Forty of the vacant homes are owned by the District, but in March the city plans to begin renovating them into low-income rental housing, said Robert L. Moore, director of the Housing and Community Development Department. In the last couple of years, he said, about 160 other city-owned homes in the area were renovated or sold to restorers.

The city also has added to Columbia Heights' improvement by making $2 million in low-interest loans to moderate-income residents in each of the last couple of years, Moore said.

Almost nonexistent in Columbia Heights is construction of homes, although at 11th and Harvard streets bricklayers are putting the finishing touches on five two-unit town houses, part of a 36-unit development by the Bradford Brothers Construction Corp. The two-unit buildings--the first-floor units are designed for rentals--will range from $58,000 for two bedrooms to $98,000 for a three-bedroom duplex.

Across Harvard Street from the town houses is the University of the District of Columbia's Georgia-Harvard campus, while across 11th Street stands a boarded-up apartment building. A block north at Columbia Road and 11th Street is another vacant apartment building that the Bradford company plans to turn into flats for graduate students attending local colleges, said Gene Bradford, the firm's president. He owns the company with his brothers William, a University of Maryland finance professor, and James, a postal worker.

Bradford, who says his firm is the most active in the area, attributed the low level of construction there to several factors. First, he said, other developers have failed "to recognize the opportunity that exists here; second, there isn't that much land vacant in Columbia Heights; and, third, the market downturn came just as the area was booming."

The Bradfords' town houses are the latest project by them in Columbia Heights in the last 3 1/2 years. Their company renovated three houses in the 1400 block of Harvard Street, turning one into a seven-unit condominium, and a house in the 1200 block of Euclid Street that William Bradford purchased.

"Columbia Heights is the best buy for the money anywhere in the District," Gene Bradford maintains, citing house prices that are about 70 percent of those on Capitol Hill and house sizes that average 3,400 square feet.

"My modus operandi is to look for opportunities, and, therefore, when I tell you that Columbia Heights is the best buy for your money, that's based on very rigorous analysis," said Bradford, a former policy analysis and planning chief with the Department of Health and Human Services.

Despite the renovation movement, Bradford contends that displacement of Columbia Heights residents is rare because vacant houses are being fixed up. "Displacement has been blown out of proportion; it just isn't happening, as I see it," he said.

But community activist Hubbard disagrees. Although displacement was greater in the years just after the riots, when much housing was razed, it remains a problem, he said. "Condo conversion is the current monster," forcing residents to move, he said.

Another side effect of renovation that Hubbard decries is speculation buying. "Before the high interest rates, there was heavy speculation," he said. "Speculation was rampant in the Mount Pleasant area, and it gradually moved eastward into Columbia Heights." Speculation dropped as interest rates rose, he noted.

The speculators, meanwhile, would "do minor renovations on the house, sell it for much more and make a profit," he said. "Others were more flippant. They'd buy a house and then turn around and sell it immediately."

Hubbard said he and other former employes of the now-defunct 14th Street Project Area Committee organized a PAC campaign against the speculators and tried to publicize houses real value. The fight yielded some success, but elderly and other residents on fixed or low incomes often couldn't refuse the large cash offers, he said.

Rowhouse shells in Columbia Heights generally sell for $40,000 to $55,000, while a liveable home can go for $65,000 to $75,000, real estate agents and developers say. A nicely rehabilitated house can sell for more than $110,000.

Columbia Heights' renovation has pushed up prices of the area's homes and property values, said Horwitz of the city's assessment office. City records show property values in Columbia Heights rose faster than the citywide and Capitol Hill averages in three of the last four years. The median sales price of houses also has consistently risen--from $27,500 in 1975 to $58,650 in 1980.

Despite the renovation, residents complain, too much crime still occurs, and the business district along the 14th Street riot corridor is inadequate. But some new residents seem undaunted.

James D. Wright, a travel consultant, and Felix A. Angel, an artist, bought their $102,000, five-bedroom home in March and then lost thousands of dollars worth of goods in two break-ins two weeks apart. "We're not going to let that kind of stuff run us out," Wright vowed. "For better or worse, we plan to live here." The home in the 1200 block of Euclid Street now sports iron bars on first-level doors and windows and a sophisticated burglar alarm system.