Look around any city and you will notice something striking: neighborhoods differ sharply by income, and often by race or ethnicity. Some streets are lined with large single-family homes and manicured lawns, while a few blocks away the housing is denser and more modest. These patterns are not random — they emerge from millions of individual decisions about where to live, shaped by budgets, preferences, and public policies. In this chapter we explore why households sort themselves across neighborhoods, how we measure segregation, and how rules like minimum lot size zoning can quietly reinforce economic divides.