Comparative Study on Housing Defect Repair Cost through Linear Regression Model

Abstract

Despite stiff competition in the construction industry, housing quality remains a problem. From the consumer’s perspective, these quality problems are called defects. Homeowners experience inconvenience and suffering due to home defects, and developers and builders also experience severe damage in time, costs, and reputation due to defect repairs. In Korea, lawsuits are increasing due to the rise in housing defects, and the cost of repairing defects determined by lawsuits is of great concern. Litigation is a burden to consumers and producers, requiring a hefty court fee, as well as attorneys and specialist firms, and takes some years. Suppose it is possible to predict the repair costs based on the outcome of a lawsuit and present it as objective supporting data. In that case, it can be of great help in bringing a settlement between consumers and producers. According to previous studies on housing repair costs, linear regression models were mainly used. Accordingly, in this study, a linear regression model was adopted as a method to predict housing repair costs. We analyzed the defect repair costs in 100 cases in which lawsuits were filed and the verdict was finalized for housing complexes in Korea. Previous studies investigated using the following independent variables: elapsed period, litigation period, claim amount, home warranty deposit, total floor area, households, and main building’s quantity, construction cost, region, and highest floor. Among these, the floor area, elapsed period, and litigation period were determined to be valid independent variables. In addition, the construction period was discovered as a valid independent variable. The present research model, which combines these independent variables, was compared with previous research models. The results showed that the earlier research model was found to have a multicollinearity issue among some independent variables. Also, the coefficients of some independent variables were not statistically significant. This research model did not have a multicollinearity problem; all independent variables’ coefficients were statistically significant, and the coefficient of determination was higher than other linear research models. Our proposed regression model, which accounts for the interaction of each independent variable, is a significant step forward in our research. This model, using the number of households multiplied by the construction period, the construction period multiplied by the litigation period, and the litigation period multiplied by the litigation period as independent variables, has been rigorously tested and found to have no multicollinearity issue. The coefficients of all independent variables are statistically significant, further bolstering the model’s reliability. Additionally, the explanatory power of this model is comparable to the previous model, suggesting its potential to be used in conjunction with the existing model. Therefore, the linear regression model predicting the repair cost of housing defects following litigation in this study was considered the best. Utilizing the model proposed in this study is expected to play a major role in reconciling disputes between consumers and producers over housing defects.