Do you have a survey showing your boundaries? If so show it to them and request that the water line be moved onto their property. You can decide whether or not to get the city involved in the lack of setback. You can use that as a bargaining chip to get their attention. Another way is to build your fence on the lot line. If their water line is damaged after you've alerted them of the mislocation, they can relocate it correctly in the repair process. Make sure you have the exact boundary verified.

Did you get a survey when you bought the place? If so, there should be property line markers put in by the survey crew.

Talk to the Zoning Administrator.

Kids playing in your yard. The inhumanity.

https://www.youtube.com/watch?v=uzLml7JdQDQ

If you don't have an actual survey marking the property lines, you do not do a thing until you do. The possibility that you are the one in the wrong exists!

What Minardi said! That happened to our neighbors. One complained that themneighbor’s new fence encroached on their walkway and steps. The survey showed the walkway and steps were over the boundary.

Hi everyone. Thank you for your replies. I do have a survey from when I purchase the home last year. So I do know that their water pipe is in fact over the line onto my side of the property line. I should have told the fence company to stop the construction and made my neighbors move the pipe instead of just moving my fence further onto my property.thia is my first property with a yard so Im still learning and trying to find the line between being assertive and pissing off my neighbors. I'm in TX so even though the land in on the other side of the fence it is still legally mine. I asked my real estate agent and they said it is fairly common for a fence to be more one way vs the other. I am adding a post to the side of my gate to basically marl it as part of mine. The neighbors will just have to remember that a silver of their backyard is actually mine. So if they decide to cover their backyard in concrete they need to stop before they get to the fence.

IANAL, but you need to get one. Because adverse possession is a thing.

" So if they decide to cover their backyard in concrete they need to stop before they get to the fence. "

I would get the property properly marked/staked now and be sure they know that they are encroaching on your property. How annoyed you are, you can either let them know or just be clear that this is not acceptable and that they may need to move it at some point.

Look up adverse possession. If you say/do nothing, over time you will legally lose the slice of land where they overstepped, and thus your property may lose value. IANAL but you may need one.