Do cities and suburbs cluster

This article addresses the issue of how closely the fortunes of suburbs are tied to the fortunes of the central city. We develop housing price indices for most of the zip codes in California and use them in a clustering procedure to determine whether city and suburban housing markets naturally aggregate or move separately. We find that central cities tend to group with their suburbs, suggesting that the housing markets of cities and suburbs are closely linked. The interrelationship of cities and their suburbs is a central issue to the future of urban areas. In this article, we examine the degree to which suburban housing provides an eco-nomic substitute for housing in the core city. Our analysis addresses two fundamental questions: How is a city defined in terms of its inhabitants and its work force? Can the suburbs of a major metropolitan area effectively be considered extensions of their central city, or are they economically distinct regions whose fortunes rise and fall independently of the metropolitan core? The answers to these questions have profound implications for the optimal governance and financial structure of cities and metropolitan areas