no where near any water.
use camera mode (f4) to watch sometime it’s a little “lake” not visible enough but still there
Thanks for the report @Anna91, the world generation almost spawned a lake there, but it wasn’t quite deep enough. (See how there is no grass in that location?)
Anyways, yes this is a bug
Haha no worries thought the spot was too good to be true
You can think of it as a swampy area where your house wouldn’t be stable