User blog comment:FairyRaven/Fairy Tail Chapter 396: Air, Review and Commentary/@comment-83.255.195.39-20140812155229/@comment-5268982-20140812172418

According to the image they are not in the ruins, but south of Magnolia and one can clearly see the city. Also, Torafusa is still in a building of some sort, because if he did unleash his attack close to the city, everyone would most likely die.