Before we start building, let's cover a couple of points about housing:
It's just a series of deals between the governor and the settlers. If you build a road and then put a tent within two squares of that road, sooner or later someone will come along and settle there. If you then right-click on that tent, you will see a pop-up window which will contain some information about that tent. Among other things, it will tell you what that tent needs - In this case, water. Provide that, and the settlers will in return build a bigger tent which will hold more people, pay more taxes, and improve the general prosperity of your city. If you then right-click that new structure, you will find they want something else. Provide that and you get another evolvement of the building. Essentially, building a block of housing is just repeating this process until your housing is where you want it.
A list of all the housing levels and what they need to evolve can be found here . I would suggest that you print this out and keep it handy as you play the game. You should strive to get to the point where you can look at a house and know what level it is, and what it needs without having to click on it. You don't have to know this to play the game, but life is going be much simpler if you do.
It's important to understand how housing obtains services (fire, food, etc). In C2 and some other games, if you built a a theater or some other facility, that structure itself would service a defined area around it. This is not true in C3. For example, if you build a prefecture in the middle of a housing area, that area is not automatically protected from fire. The prefecture will send out a sprite (walker) who will randomly patrol the area. At every intersection a separate decision will be made as to the future route. As the walker passes structures, those buildings are given a certain level of immunity from fire. This immunity will erode as time passes. If the walker does not pass the building again before the immunity expires it will catch fire. This process is, more or less, what happens with all the game's services. To see this in action turn on any of the overlays, watch your selected walker, and see what happens as he (she) passes structures. A lot of the strategy of this game concerns trying to place services so that walkers will be forced to pass selected buildings.
Some tips for playing this game - take or leave them as you see fit.
Ok let's build something.........