Water markets in the western United States have expanded over the last 40 years driven by two forces -- population growth in the West and Southwest and limited development of new storage projects. Until 2008 house prices, home construction and population growth appeared to be locked in an ever-increasing upward trend. With little historical experience to the contrary, water market prices similarly appeared to be driven by real estate development. The collapse of the housing market in the last three years provides an opportunity to examine the connection between the real estate and water markets.