The Colorado River's long-term drought, population growth, and outdated water agreements have created a supply-demand imbalance, impacting housing markets in the Southwest. Declining reservoir levels have led to mandatory water usage cuts. Arizona faces direct risks due to reliance on river water, while Nevada's conservation efforts support growth. California's Inland Empire may face supply challenges, though coastal areas benefit from diverse water sources. Water issues will influence development feasibility and market competitiveness regionally.