When Texas voters head to the polls on November 4, 2025, they will decide the fate of one of the most consequential infrastructure investments in state history. Proposition 4, a constitutional amendment that would dedicate up to $1 billion annually in sales tax revenue to the Texas Water Fund, has garnered broad support from an unlikely coalition of farmers, environmentalists, business leaders, and real estate professionals. For Texas Realtors, the message is unequivocal: real estate derives its value from water, and Proposition 4 represents a generational investment in the very foundation of property values across the Lone Star State.
The Fundamental Connection Between Water and Property Value
The relationship between water infrastructure and real estate values is not merely theoretical; it is foundational to how properties are appraised, marketed, and valued in every corner of Texas. Water is the foundation of life, community growth, and the basis of value for every piece of property in Texas, touching every corner of the state’s economy from families seeking safe drinking water to businesses planning for expansion and developers building new homes.
For homeowners, the connection is immediate and tangible. A property’s value depends not just on square footage or location, but on access to reliable, clean water. Modern water systems protect property values and provide peace of mind, while aging or unreliable infrastructure can quickly erode both home values and community desirability. When potential buyers evaluate properties, water reliability ranks among the top considerations, influencing not just whether they’ll make an offer, but how much they’re willing to pay.
For real estate professionals navigating daily market realities, this connection between water and value plays out in countless transactions. Communities with robust water infrastructure attract buyers and support higher property values. Conversely, areas plagued by boil water notices, service disruptions, or uncertain water supplies struggle to compete in an increasingly competitive housing market. Without a reliable water supply, homes lose value, communities stall, and the state’s economic future is jeopardized.
The Scale of Texas’s Water Infrastructure Challenge
Texas faces a water infrastructure crisis of staggering proportions. Studies project that $154 billion will be needed over the next 50 years to fully address water infrastructure concerns as the state’s population and water demand continue to grow. This massive funding gap threatens not just theoretical future growth, but current quality of life and property values across the state.
Texans endure an average of nearly 3,000 boil water notices per year, as aging water systems leak enough water to fill an enormous reservoir annually. In Houston alone, the city loses enough water through leaking pipes each year to supply the entire city of Fort Worth. These aren’t just engineering statistics, they represent real disruptions to homeowners, businesses, and communities that directly impact property marketability and value.
The crisis extends beyond maintenance. According to the state water plan, Texas faces a long-term water shortage if the state undergoes a prolonged drought and doesn’t expand its water supply portfolio, potentially costing billions in lost GDP and over one million jobs. For real estate markets, such economic disruption would be catastrophic, driving down property values and stalling development across entire regions.
Climate change compounds these challenges. Recent analysis shows a 5% to 15% increase in extreme one-day heavy rainfall since the late 20th century, while drought conditions simultaneously threaten water supplies. Texas communities face the dual challenge of protecting against devastating floods while ensuring adequate water supplies during dry periods, both critical factors in maintaining stable property values and enabling continued development.
How Proposition 4 Works
Proposition 4 offers a pragmatic solution to Texas’s water infrastructure funding gap. The amendment would authorize the Texas Legislature to require the comptroller to annually allocate the first $1 billion in net sales tax revenue after revenue exceeds $46.5 billion to the Texas Water Fund, with the comptroller’s authority to allocate funds expiring on August 31, 2047.
Critically, Proposition 4 dedicates existing state sales tax revenues to the Texas Water Fund, with no increase to the tax rate or new taxes for Texans. This funding mechanism leverages Texas’s robust sales tax revenue, which totaled $47.2 billion in 2024, to address water infrastructure without imposing additional burdens on taxpayers or property owners.
At least 50% of the annual allocations must go toward the New Water Supply for Texas Fund and the State Water Implementation Fund for Texas (SWIFT), which supports water infrastructure projects identified in the State Water Plan. The New Water Supply Fund finances projects that expand Texas’s total water availability, including reservoir construction, seawater desalination, water reuse systems, aquifer storage and recovery, and other innovative approaches to increasing supply.
The remaining 50% would be divided between other Texas Water Fund programs, including the Flood Infrastructure Fund, Agricultural Water Conservation Fund, Economically Distressed Areas Program, Rural Water Assistance Fund, and various loan assistance programs. This diversified approach ensures funding flows to both immediate infrastructure repairs and long-term supply expansion.
The Texas Water Development Board would administer the funds, allocating resources based on regional water plans that have undergone public input processes. This structure provides accountability while maintaining flexibility to address diverse regional needs across Texas’s varied geography.
The Real Estate Industry’s Stake in Water Infrastructure
The Texas real estate community’s support for Proposition 4 reflects hard-won experience about what drives property values and enables market growth. For homeowners, stable and modern water systems protect property values and provide peace of mind, while for prospective buyers, access to water is a deciding factor in where they choose to live and invest.
Infrastructure investment fundamentally shapes housing affordability and long-term market resilience. Communities that can reliably deliver water services attract development, support population growth, and maintain stable property values. Areas struggling with aging infrastructure face a downward spiral: deteriorating services discourage new residents and businesses, reducing demand for housing and ultimately suppressing property values.
The connection extends beyond residential real estate to commercial and industrial properties. Businesses evaluating expansion or relocation decisions examine water infrastructure carefully, knowing that reliable water supplies are essential for operations, employee recruitment, and long-term viability. Reliable access to clean water is foundational to Texas’s economic success, providing the certainty and long-term funding needed to support businesses, communities, and families as the state continues to grow.
For agricultural real estate,a significant component of Texas’s land market, water infrastructure is even more directly critical. Texas agriculture understands how a lack of water affects lives, with farmers and ranchers experiencing hardship every drought alongside their rural communities. Agricultural property values depend heavily on water access and irrigation infrastructure, making Proposition 4’s investments in agricultural water conservation and supply expansion particularly valuable.
Broad Coalition Support Signals Consensus
Proposition 4 has assembled an unusually diverse coalition of supporters, reflecting the measure’s broad impact across Texas’s economy and society. More than 50 business and community leaders have banded together to inform voters about Proposition 4, representing every corner of the state, including chambers of commerce in Dallas, Houston, New Braunfels, San Marcos, Tyler, and Kilgore, along with major trade organizations including the Texas Association of Business, Texas Association of Manufacturers, Texas Chemistry Council, Texas Farm Bureau, Texas Oil and Gas Association, and Texas Water Association.
Environmental organizations have also endorsed the measure. The Sierra Club supports Proposition 4 because it would improve local water reliability through repairs and upgrades to aging systems, strengthen disaster preparedness through flood mitigation projects, and support long-term water supply solutions to help communities meet growing demand.
This broad coalition, spanning business interests, environmental advocates, agricultural producers, and real estate professionals, demonstrates that water infrastructure transcends typical political divisions. When homebuilders, environmentalists, oil producers, and farmers all support the same policy, it signals a rare consensus about both the challenge and the solution.
Addressing the Funding Gap
Texas 2036 projects that existing state and federal funding programs will cover roughly 25% of the estimated $154 billion needed for water infrastructure, leaving a long-term funding gap of $110 billion. Proposition 4’s commitment of up to $20 billion over 20 years. While substantial, represents only a partial solution to this massive challenge. However, it provides a critical foundation and predictable funding stream that can leverage additional federal funding, private investment, and local contributions.
The funding model established by Proposition 4 mirrors successful approaches to other infrastructure challenges. Texas has long used dedicated revenue streams to fund highway construction and maintenance, recognizing that reliable funding enables better planning, more efficient project execution, and greater long-term value. Applying this proven model to water infrastructure acknowledges that water deserves the same priority and planning horizon as transportation.
The amendment would prohibit the state legislature from changing the allocation law for the first 10 years, providing stability that allows communities and water agencies to develop long-term plans confident that funding will materialize. This predictability is crucial for complex water projects that often require years of planning, permitting, and construction before delivering benefits.
Economic Development and Competitive Advantage
Texas’s explosive population growth, the state added more than four million residents between 2010 and 2020, places unprecedented demands on water infrastructure while simultaneously driving real estate development. Communities that can demonstrate reliable water supplies attract the businesses, families, and investments that fuel real estate markets. Those who cannot face an increasingly difficult competitive environment.
Proposition 4 will provide certainty to Texas businesses that are already invested in the Lone Star State and will help attract businesses considering relocating to the state. For real estate markets, this translates directly into sustained demand for commercial, industrial, and residential properties. Companies need confidence that water infrastructure can support their operations, not just today, but decades into the future.
The economic stakes are substantial. Without action, prolonged drought could cost the state $165 billion in GDP each year by 2050. Such economic devastation would crater property values across Texas, making water infrastructure investment not just prudent but essential for protecting existing real estate wealth and enabling future appreciation.
The Path Forward
Texas Realtors’ support for Proposition 4 reflects a clear-eyed assessment of what creates and sustains property value in the 21st century. As real estate professionals, they know that a healthy housing market depends on strong infrastructure. Water isn’t just another amenity or nice-to-have feature; it’s the fundamental prerequisite for communities to function, grow, and prosper.
The measure represents more than policy or infrastructure spending. It’s a statement about Texas’s priorities and vision for the future. By dedicating substantial, predictable funding to water infrastructure, Texas would signal to current and prospective residents, businesses, and investors that the state is serious about maintaining the quality of life and economic opportunity that have driven its remarkable growth.
For the real estate community, the choice is straightforward. Every property listing, every home sale, every commercial development depends on the water infrastructure that Proposition 4 would help fund. Proposition 4 is more than a policy choice; it’s a generational investment in safeguarding communities, protecting property values, and ensuring that the state remains a place where people want to live, work, and invest.
As Texans evaluate Proposition 4 at the ballot box, they’re not just deciding about infrastructure spending or water policy. They’re deciding whether to invest in the foundation upon which all property value rests. For Texas Realtors and the millions of property owners they serve, the answer is clear: real estate derives its value from water, and Texas’s future depends on securing that foundation for generations to come.
