Young Adult Fantasy Novel I read in the 1990's

Justinthorne76

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A few years ago I book I read as an early teen crept back into my memory and I've been obsessed with finding it again. Unfortunately I can remember only a few details of the book. So to the best of my memory.

A young boy's family is killed (seems like in a fire)
The boy has magical abilities but they are dampened due to the trauma or he might even be mute at first from the trauma.
At some point he meets and befriends what I believe was a kobold.
He meets and befriends a girl his age, she might have been an Elf, or Faerie or some magical creature as well.
At one point they have an awkward exchange where they bathe and remove their clothes.
The boy at one point mentions something about "booty" in reference to treasure but the kobold kicks him in the butt and says that's booty.
They have a potion that one drop will cure hunger, and tastes like their favorite food.
It seems like I remember the cover of the book being predominately light blue.
The end of the book has the characters watching from the shore as the boy (who is now an adept wizard) creates a fireworks display and a magical dragon made of water.
I know these are all pretty vague details but unfortunately this is all I can rack my brain to remember. I read the book sometime in the 90's, couldn't have been any later than 1995, but it's a possibility its even as old as the 80's as my Mom got all of her books from garage sales.
Thanks if you've taken the time to read this.
 

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