First of all - you are under a lot of stress and your little one is only 16mths old - that is hard let alone on top of everything else. My question to you - do you really have to give up on your dream or is it possible to delay things. A lot can happen in a year. Maybe set some goals for the next year that don't involve another and relook at things this time next year. You have a bit of a to do list from the looks of things:
1. Rebuilding - this is a major stress in itself. Can you set some goals just to get this side of things under control. Can you get in before it is red-stickered? Surely if it is red-stickered doesn't that mean insurance will pay-up?
2. Sleep issues. I understand the post traumatic stress after an earthquake to a degree. Ours was only small with no damage but I still think about it a lot and plan in my head how to get the kids out if another hits (I think this is typical mum worries as DH has not really thought about it!). I have lanterns and torches positioned through the house for a night-time (loss of power) quake. So, maybe by practical applications you can start to rest easy. Anyway, at 16 mths it is not unusual for a child to be in her parent's room anyway so is it really an issue? You know that in 6 mths time the teething will be over and things will probably be better.
As for giving up on your dream - I think you are too exhausted to make this decision. The best decision would be to put it away for a while and relook at it in a year or so. If you would regret it for the rest of your life it does not sound like you really want to give up on it. Lack of sleep is probably making it all look too hard right now. When you get things sorted out and are a bit rested I am pretty sure things will seem different.
Good luck and I hope you can get some rest and peace. Any chance you can contact your local church for help?