The blaring sirens of the fire engines racing out of their station on Lanier Place drive some people crazy. Not Jonathan Deull. A die-hard urbanite from Manhattan's upper West Side, the sound makes him feel at home.

Plus, the fire station is part of history. When Engine Company 21 went into service in 1908, the Ontario Apartments, then a summertime retreat for the wealthy, was just about the only thing in the area. As the city pushed northward, a neighborhood grew up around the station.

Today, children play on the concrete pad in front of the fire station. One day, David, Jonathan Deull's toddler, may join them.

This is Lanier Heights, a tiny pocket of Northwest Washington that has maintained a distinct family flavor and sense of neighborhood history amid the urban bustle and cultural chic that the larger adjacent community of Adams Morgan has become.

Bounded by Adams Mill Road on the south and west, Harvard Street on the north and Columbia Road on the east, it is an area where most residents know each other. When weather permits, they sit on the stoops of their row houses and chat with each other. They tell naive newcomers about the community's history.

They tell tales of the Ontario, whose guests included Gen. Douglas MacArthur and Woodrow Wilson. And there's the Yoelson family that once lived on Lanier Place, including a son named Al who spelled his last name Jolson. Members of the radical left of the 1960s are said to have founded Students for a Democratic Society in the row house at 1777 Lanier Place where Deull and his family now live. A suspect in the March 1971 Capitol bombing was captured on Gene and Nancy Thompson's roof on Lanier Place.

Jonathan Deull and his wife, Sheryl Sturges, both 30, stumbled onto Lanier Heights by accident, making a wrong turn while house-hunting 2 1/2 years ago. They looked at a three-story row house and bought it the next day. The price was $250,000. Two months later, someone offered them $270,000. But Deull and Sturges said they love their neighborhood too much to consider moving.

Their house, which was built in 1910, has a kitchen and two pantries on the first floor, and another kitchen on the third floor, where the couple rents three rooms to bed-and-breakfast visitors. They have off-street parking in the alley at the rear of their house and a large, fenced-in back yard.

"We just planted a little lawn and we're going to put swings out there for David," said Sturges, director of strategic planning for a company that builds cogeneration plants and sells steam power. Deull, a consultant for nonprofit organizations, said what he likes most about the neighborhood is its diversity.

"I can't think of another neighborhood in Washington that has this kind of feeling to it," Deull said. "It's like real life here ... and it has people on the street and people in all different backgrounds."

The neighborhood residents include middle-aged and elderly blacks and whites who have lived there for 20 or 30 years. Younger families, both black and white, now are beginning to move in as part of a trend toward the conversion of multifamily row houses into single-family homes. The area also has a mix of recently arrived Hispanics and Ethiopians.

"There are a lot of people who would prefer a less diverse neighborhood," Deull said. "I don't. I thrive here. It's a place where I would be happy to have my children grow up."

Gene and Nancy Thompson's three kids already are grown. The Thompsons' purchased their Edwardian-style row house in 1963 for $22,000. Back then, "this was basically considered an undesirable area," said Gene Thompson, 50, a retired budget worker for the federal government who now has a retail kitchen cabinet business. After World War II, the area's more affluent residents began moving to the suburbs. Less affluent residents began moving in.

Lanier Heights used to have its own civic association, of which Thompson said he was a founder and member. But as the larger community of Adams Morgan grew in popularity in the late 1970s, the Lanier Heights Association declined.

Neighborhood association or no, the area remains close-knit.

"It's one of the few neighborhoods in Washington ... " Gene Thompson said.

" ... where a lot of people know each other," his wife, 48, added.

Lanier Heights has benefited from the area's popularity as a social and cultural hub. More middle- and upper-middle-class residents have moved into the area, helping its revival while adding to its diversity.

There are "blacks and whites from blue-collar to upper class," Thompson said. "So that's unusual to have the economic mixture of the races."

Along with his family home, Thompson said he owns two other properties in Lanier Heights. But the area is becoming so pricey, he said, that "I couldn't afford to buy a house here now."

The highest price for a house on Lanier Place last year was $202,000 for a row house in the 1700 block, according to Rufus Lusk and Son Inc., a real estate information service. While condominiums are sprouting throughout the Adams Morgan area, Lanier Heights remains primarily single-family row houses and apartment buildings, said George Dravillas, whose real estate firm has been in the area since 1953.

Lanier Heights, as well as the rest of Adams Morgan, are included in the Mount Pleasant area for city assessment purposes.

In the first half of 1987, the average price of a single-family home in that assessment area was $136,864 and $206,889 for condominiums, according to the Lusk service.

The rising real estate prices in the area have some longtime residents worried. Lanier Heights has been 88-year-old Charlotte Filmore's home since 1962. For 13 years, she has rented a house in the 1700 block of Ontario Road, near the congestion of Columbia Road. She pays $900 a month.

Filmore has seen the area shift with the times. When she moved there, she said, "It was nice. These houses were beautiful. But everybody moved away after the riots. Very few of them stayed around. Now they're all coming back."

The area's upswing has her worried about the displacement of longtime residents or others who may not be able to keep up with the increasing purchase prices or rental rates. "They push all the people out that have been raised and born there and make new apartments and condos," she said.

Besides the fear of development, Filmore said she also is bothered by the number of vagrants who hang around Columbia Road and the litter that some of them create.

"I never thought I'd have to have iron bars," she said of the bars on her windows.

Crime is a fact of urban living, said Sturges, and part of the trade-off one makes to live in certain areas. She is upset that her car has been broken into three times, but that is one of "the things that you have to put up with in order to live in an urban area."

So are blaring fire engine sirens.

Tekeste Sultan, 32, and Tirhas Andemicael, 21, moved onto Lanier Place four months ago with their 15-month-old son, Meron Tekeste.

The church group that sponsored their exit from Sudan placed them on Lanier. Sultan was a teacher in Khartoom in the Sudan; here, he is a busboy. "Downward mobility," he explains.

Although they enjoy Lanier Heights, they will remain only temporarily, Sultan said. They are renting a one-room apartment for $430 a month.

It is much too small for the three of them, Sultan said. On top of that, the fire trucks frighten the baby.