Paul Abersold's Northwest Washington neighborhood is a study in urban blight.

In some areas of the neighborhood, known as Mount Vernon Square, men loiter on litter-strewn vacant lots and drink alcohol in public. At other locations, people operate open-air drug markets from alleys and boarded-up houses. At night, transvestites stroll along 10th Street, propositioning passing motorists.

"A stranger might see it and run for the suburbs," said Abersold, a medical researcher who has lived in the neighborhood for nearly four years.

Despite the neighborhood's many problems, an increasing number of white-collar professionals such as Abersold have bought houses in Mount Vernon Square, more because of what they envision than what they see.

Abersold, who moved there from an apartment in Dupont Circle, typifies many of the area's recent home buyers. Unable to afford homes in the District's more upscale areas, yet unwilling to forsake the vibrancy of life in the inner city, they are buying and renovating "shell" houses, gambling that the neighborhoods will rebound.

"This is about the only place that is affordable anymore," said Elizabeth Blakeslee, a neighborhood commissioner in the Mount Vernon Square area.

A real estate agent who moved from 15th Street to her current location five years ago, Blakeslee said she paid $49,000 for her one-bedroom home on Massachusetts Avenue. "It was a great buy for the money," she said.

Hal Davitt, who moved to Mount Vernon Square from Foggy Bottom 11 years ago, said he paid $80,000 "for a shell," which he has renovated.

"You could not have gotten as good a house for the money anywhere else in the city," said Davitt, a computer sales manager.

Davitt, president of the Blagden Alley Association in Mount Vernon Square, said the home buyers who have moved into the area have banded together and formed neighborhood watch and civic groups that have drawn attention to the need for better delivery of city services. The newcomers' activism, he said, also has fostered a stronger sense of community in Mount Vernon Square.

"There are a bunch of glorious houses and there are a lot of people who like each other," said Davitt. "It's really a tightknit community. The folks who have moved in really haven't sold out."

The square itself is a park -- ringed by several neighborhoods -- that intersects with Massachusetts, New Hampshire and New York avenues.

Bounded on the south by Massachusetts Avenue, and on the north by M Street, Mount Vernon Square is inhabited by transients, government workers and professionals who live in a motley mix of apartment buildings, town homes and detached houses.

John Fondersmith, chief of the downtown section of the District government's planning office, said the multiethnic Mount Vernon Square, which has neighborhoods that reflect the best and worst in D.C. housing, is not for everybody.

"It's for people who in effect want an urban lifestyle," he said.

On some streets, boarded-up houses stand beside newly renovated homes and weedy lots overlook well-kept lawns.

Housing costs in Mount Vernon Square also reflect its diversity. Some apartments, such as Paradise Gardens, are subsidized, while some homes, between Fourth and Fifth streets, are assessed at upward of $325,000.

Abersold, who along with his wife is seeking to have some portions of the neighborhood designated as historic sites, said some of the homes date to the pre-Civil War era.

He said some of the large homes, which range in architectural styles from gothic to Romanesque, were built during the 19th century when the area around Mount Vernon Square was a thriving business district.

Abersold, who lives in the 900 block of N Street, said he and his wife enjoy the area because of its access to restaurants in nearby Chinatown, museums and subway stops, as well as the central downtown business district.

While some residential pockets in Mount Vernon Square have shown signs of stabilizing, area homeowners concede change has been slow.

"It's not all sweetness and light over here," Blakeslee said.

"I really did think five years ago that things would be farther along. I am optimistic that many things will happen in five or six years."

The transition of Mount Vernon Square may be hastened by plans to expand the Washington Convention Center on New York Avenue.

Mayor Marion Barry unveiled a proposal last month to more than double the District's downtown convention space with a $400 million underground complex that would occupy a six-block area north of Mount Vernon Square.

Above ground, running south from N Street NW, the project would include new housing units, the downtown campus of the University of the District of Columbia and a commercial complex of hotel space and offices.

As outlined by Barry, the plan also includes the possibility of building a 25,000-seat sports arena on the site of the Washington Convention Center, off the southwest corner of Mount Vernon Square.

Barry, who has made downtown development a priority in his three terms as mayor, has said the new exhibition space is needed if Washington is to remain competitive with other popular convention cites.

The proposed expansion plan, which is still under consideration, has received mixed reactions from Mount Vernon Square residents.

Some residents fear the complex, with planned space for parking 3,000 vehicles, would undermine residential development, add to traffic congestion and noise and generally disrupt the flow of neighborhood life.

Others say the convention center complex is just what is needed to attract more shops and restaurants to the area. Most of the businesses in that area now are small, mom-and-pop grocers and mechanic shops, which some residents say undermine convention business.

"If a convention {visitor} stepped out of a meeting and wanted to get a souvenir to take back to Omaha, about all they could get in my neighborhood is a six pack," Blakeslee said.

Clarene Martin, an advisory commissioner and candidate for D.C. Council, said she is concerned that the development would result in the displacement of poor blacks in that area.

The convention center plan, which has been the focus of intense political feuding among Barry administrators, D.C. Council members and community groups, may not get underway for some time.

Some Mount Vernon Square residents say that until then, they will continue to combat the drugs and crime and press for improvements.

"You put up with a little trash and you put up with the drugs and you hope it all blows over," Davitt said. "I'll stick it out until they keep raising taxes in the District or until the development moves us out."