Taipei, the capital city of Taiwan, has suffered a scarcity of land supply. The size of residential development sites over the past 20 years falls in the range of 500 and 700 square meters. Furthermore, the size of development sites varies widely depending on the sites’ locations within the city. Given that the size of a development site is a rational economic decision, this study sets out to unveil the determinants. Residential development projects completed between 1994 and 2015 are examined by regression analysis. Results show that residential development sites tend to be larger along a major road and smaller when they are closer to a metro station. Also, residential development sites are likely to be smaller when they are located in areas where ownership of land is relatively fragmented. Finally, a larger residential development site often results from the assembly of several smaller sites. We further selected one of the oldest neighborhoods in Taipei City, the Wan-Hua Station areas for a case study. Analysis of the reliable data sets of land title registration and building use permits between 1970 and 1988 indicates that a significant amount of time and resources has been expended for land assembly activities. That is to say, small sites and fragmented land ownership are among the primary contributing factors to the inert supply of housing. Nevertheless, there does not seem to be an apparent solution to the land assembly problems.