"Jean habite la ville de..." est tout-à-fait correct. Le verbe "habiter" est transitif. On peut donc dire "il habite une très grande maison, un peu à l'écart du centre". "Habiter" peut aussi s'utiliser avec "à" ou "en" : "il habite en Espagne".

If you don't precise 'le ville de ' then you can use the prepositions à . Jean habite à Paris. In this case you precise that Paris is a city so then the sentence is completely different. In English It would be like Jean lives in the city of Paris versus Jean lives in Paris.

To complete Michel, you may also hear sometimes "J'habite sur Paris" ou "Jean habite sur Paris". It's incorrect, don't use it, but lots of french speaking people make the mistake.

It's not natural to say "J'habite à la ville de Paris". It's more natural for French people to say "J'habite Paris" or "J'habite à Paris" (both are correct).