Quite possibly yes... Real estate here is a special circumstance, rivaling Manhatten in some ways. Less damage expenses, and demo costs he could stand to make some money in short haul. After the banks and agents are done roughly $70-100k??? to sell the lot clean ready to build. (if he does it before tax time...) More if he goes for the long run. (Granted if he has the capitol... Don't know about that...)
The current laws that protect existing housing prohibits demo. The reason it sold so low last year is because they couldn't tear it down, and too cost prohibitive to rehab. Talked to a GC who looked at it last year said the math on the place drove him off it, 80-100% demo permits go into the hundreds of thousands dollars and equal miles of red tape with public hearings. (This guy skipped most of that.) Making it not profitable to tear down an existing structure. It has developers salivating over the few empty lots that they get at ~$700k they can slap a unit or two on for $1-300k and sell at $1.*M. They end up making $1-300K(*?), depending on what they get away with the Planning Dept. location and market conditions.
These same demo prohibitive laws make the residential construction market here >90% re-model. Been busy doing that for the last 14 years. I have even re-modeled the same home 3 times! People buy, then "flip" homes after two years - new buyers do the same... Everyone makes a little each time.
