About five years ago, a Capitol Hill home made the local news. The imposing brick structure, at Seventh and East Capitol streets Northeast, was the first house in the neighborhood to sell for a million dollars — $1.15 million to be exact. Today, no fewer than eight homes have joined the millionaires club, and a three-story, Federal-style mansion in the unit block of Seventh Street Northeast is tagged at a cool $2.2 million. The average price these days hovers around a half-million.

“Things are pumping in the real estate market,” says veteran Realtor Bob Williams of Coldwell Banker. “We thought it had peaked two years ago, but it keeps going and going, and there’s a spurt right now. Sure, there have been bumps along the road but the market keeps coming back.”

In his spacious home office near Third and East Capitol streets, Williams, 51, compares the shifting real estate market to ocean waves.

“Every once in a while, the wave retracts,” he says, jumping up and waving his arms to demonstrate, “but it always rolls back, and each time it recedes less and less.”

Capitol Hill’s real estate market began creeping up in the 1970s, but double-digit interest rates slowed it down in the early ’80s. Within the decade, however, things picked up. After another blip in the early 1990s, the market advanced, and there’s no end in sight, Williams believes.

No. 1 Reason?

“Traffic,” states Phyllis Young, associate broker with Coldwell Banker. “People have only 24 hours in a day, and who wants to spend three or four hours going to and from work? That leaves no quality time. And empty nesters,” Young adds. “Couples who lived in Annandale or farther out reached a point when they wanted a quality of life they never enjoyed when they were raising children.”

One woman paused while escorting her children on Halloween to explain that she is enjoying that quality of life while raising a family. Along with her husband and three small children, she returned to the Hill after a brief stint in Centreville, Va. “We moved there when we became pregnant,” she says, “and while we were there we didn’t meet a soul. Now we live on 12th Street Southeast, and we’re part of the neighborhood. Our children attend charter schools, and we love it here.”

Another boost for the housing boom is the stock market bust. “People have figured out that real estate is a tangible commodity,” explains Jackie von Schlegel of Re/Max Capital Realtors. “They put money in real estate to invest and for a place to live, and they are not going to wake up in the middle of the night to find their houses have disappeared, like Enron or WorldCom.”

Residents also attribute the Hill’s housing boom to confidence in Mayor Anthony Williams (D), who has improved Washington’s image during his two terms.

Where Are People Buying?

“Basically, everywhere,” Bob Williams says. “Whatever is in the buyer’s price range.” However, neighborhoods like East Capitol, Eastern Market and Lincoln Park are particularly desirable.

“Even along North Capitol, magnificent Victorian houses are being reclaimed,” says Young. “We’re also excited about the waterfront, M Street Southeast (see story, page 31), the Navy Yard, South Capitol and beyond.” Young also touts the plethora of Metro stops on and near Capitol Hill: Capitol South, Eastern Market, Potomac Avenue, Stadium Armory, Navy Yard, Union Station and the soon-to-open Red Line stop between Union Station and Rhode Island Avenue Northeast.

Other ‘Hot’ Neighborhoods?

“SoFla,” von Schlegel laughs, explaining local agents’ term for the area around Florida Avenue Northeast near Gallaudet University. Also moving quickly are houses around RFK Stadium and along wide, stately Potomac Avenue Southeast near the Congressional Cemetery.

According to most agents, Capitol Hill’s boundaries extend roughly from RFK at the east to the Capitol in the west. The Southeast Freeway marks the southern boundary, and the northern edge now reaches beyond H Street.

Von Schlegel’s eight-person realty team recently sold a house in the $900,000 range, and anything under $600,000 “jumps off the shelf,” she says. “We can expect multiple offers. … Hill prices are where they should be. … We’ve been undervalued for years, and we’re finally catching up with Dupont Circle and Georgetown.”

Who Is Moving to Capitol Hill?

Not surprisingly, several Senators and House Members (and many staffers) live on the Hill, mainly because it cuts their commute. Solons dwelling nearby include Sens. Chris Dodd (D-Conn.), Barbara Boxer (D-Calif.), Mark Dayton (D-Minn.) and Mary Landrieu (D-La.), and Rep. Jerry Lewis (R-Calif.).

“A lot of buyers come here from Georgetown,” adds von Schlegel, who lives near Ninth and C streets Southeast. “They can’t handle the parking and college kids — and from Dupont Circle, with its own parking hassles. Others come from Northern Virginia and other suburbs.”

Many other transplants are young couples taking advantage of tax breaks and low interest rates (the fixed rate for a 30-year mortgage is hovering around 5.625 percent as of Nov. 16).

Singles also come to the Hill. One prospective home owner is Michael Legacki, who rents a two-bedroom apartment on 12th Street Southeast and operates a construction management firm in Virginia. A carpenter by trade, Legacki is looking for a “shell” to renovate himself.

Having relocated from Philadelphia to accept a job, Legacki, 55, browsed in various D.C. neighborhoods but “nothing clicked.” When he discovered Capitol Hill, he walked around, found the area pedestrian-friendly and started looking for a place to live.

One day he was waiting to see an apartment on 12th Street when a resident noticed Legacki’s Pennsylvania license plates and struck up a conversation. “We hit it off,” recalls Legacki, and the man offered his renovated rental unit. The only problem was Legacki’s 65-pound labrador. “We only take small dogs,” he was told. However, Legacki talked his would-be landlord into an “interview” with 11-year-old Lulu, and the laid-back pooch passed with flying colors. Legacki pays $1,200 a month for his abode, while hoping to purchase a shell nearby.

The housing boom extends to condominiums. When The Car Barn condos opened at 14th and East Capitol streets Northeast 20 years ago, units stood empty until they switched to rental. Now, as those apartments are vacated, the Car Barn is selling them as condos. One-bedroom units start around $300,000, and a coveted parking space can go for $30,000 annually. The situation is similar at the brand-new Bryan Square near14th and Independence Avenue Southeast, where buyers are snapping up handsome townhouses and loft-style condos in the converted, circa-1909 school building. (For more on Hill condos, see page 26.)

There’s a downside to this boom, however. People who purchased houses for $200,000 a few years ago have seen their properties triple in value. “We can’t afford our homes any more,” they joke. And if tempted to cash in their chips, they discover there’s no place to go. Other folks cannot afford to live on the Hill at all.

But overall, the outlook is positive. “The whole city is bursting at the seams,” says Young. “Washington is finally being recognized as an international city, and where else in the world can you live practically across the street from a national capitol building?”