the quick answer to the question in your subject line is, yes.
to qualify that let me state that i think home studio set-ups are great for somewhat technically minded musicians to have as a writing tool. NOT for real demos that they are trying to get signed off of though, and NOT for actual albums generally. the only problem i see with home studios is that there are too many guys putting them together with consumer level gear, no real acoustic considerations beyond a few auralex items, and little-to-no experience and yet trying to compete for real business. you can't just buy some gear at GC or similar, toss it in your living room, read a book on micing, and open up for business... this is the illusion the pro-sumer gear manufacturers and retailers try to sell you, but there is no substitue for studying, interning, and spending a minimum of a few years learning at least the basics of the craft and getting a solid start on the lifelong process of training one's ears. i know easily 30 home studio just in my immediate area... they are not very enticing for serious bands.
and yeah... as for engineers, the market is flooded here. most i know supplement or get all of their income by delivering pizza or some such. one guy i know who's actually pretty damn good works at a wood shop to make ends meet. not to be discouraging, but let's be real here... it's harder than ever before to break into this business. if you actually manage to work with good bands before you are ready you will not give them the results they seek. the problem there is that good bands talk to other good bands. i started working with good bands myself almost from the start, and when my lack of ability at the time showed itself in the end result, my rep was damaged for future work, even after i started getting pretty good. it took me a good while to overcome that, but i learned the lesson and spent more time with younger acts... practicing, studying, and getting better. i also didn't overlook the value of learning directly from pros by volunteering. even that is getting harder and harder these days as pros are literally bombarded with internship requests now... i get several a week it seems myself.
good luck.