In my opinion the home studio deserves to be the fifth element of hip hop. Hip hop originated as a way of life that anyone could have access to. Up until recent years having a studio in your house was something only a celebrity could own but now, with the availability of computers, anyone can record music to share with their family and friends.
These personal studios are changing the music industry forever. Allowing underground artist to get their music heard with out corporate censorship or record label agreements. It is directly because of the rise in these studios that we now see an increase in the number of independent labels and artist in the scene.
Owning a studio in your house can be cheap and fun. On the most basic level, all you really need is a mic and a recording program. I started out recording on a cheap Pentium III gateway computer running acid 2.0 with an $8 radio shack mic. It was not exactly industry standard but it worked and after some practice I was able to make some cool sounding music.
You can also work on beat production and graphic design. Many people who have studios end up building professional sound proof booths. One thing to always remember is the most important component to your home studio is you.
As the engineer you need to gain experience and learn the programs you decide on. Eventually you can achieve the quality you are looking for. Just remember the more experience the better the sound.
I came to learn that I was unable to produce the best professional quality. You can get very close but it is nearly impossible to put out top quality professional music from a home studio because the hardware simulators used in many programs are unable to accurately duplicate the hardware it was intended to replace. That is why your studio cost you about a $1000 and many professional studios cost well over a $1,000,000.