Yep thats it 
. Im working on a City Map at the Moment. I got a Building with 52.000 Verts. If you have a whole city with that polycount it would cost tremendous computing power. Im doing 3 different LOD`s (actually 2) . The Third Level is the hiding mode.
I would strongly recommend to take a look at LODs as soon as possible. Because you create the LODs from the original Meshes. So you build up your mesh, and generate the LODs afterwards. Otherwise you will have to open each model again and so on.. Thats not very practicable for your workflow, trust me
good Luck !!