Bash is not expanding the ~ character in the argument --home_dir=~. For example:
$ echo --home_dir=~
--home_dir=~
Bash does expand ~ when I leave out the hyphens:
$ echo home_dir=~
home_dir=/home/reedwm
Why does Bash have this behavior? This is irritating, as paths with ~ are not expanded when I specify that path as an argument to a command.
bash is somewhat mistakenly treating home_dir=~ as an assignment. As such, the ~ is eligible for expansion:
Each variable assignment is checked for unquoted tilde-prefixes immediately following a : or the first =. In these cases, tilde expansion is also performed.
Since --home_dir is not a valid identifier, that string is not mistaken for an assignment.
Arguably, you have uncovered a bug in bash. (I say arguably, because if you use set -k, then home_dir=~ is an assignment, even though it is after, not before, the command name.)
However, when in doubt, quote a string that is meant to be treated literally whether or not it is subject to any sort of shell processing.
echo '--home_dir=~'
Update: This is intentional, according to the maintainer, to allow assignment-like argument for commands like make to take advantage of tilde-expansion. (And commands like export, which for some reason I was thinking were special because they are builtins, but tilde expansion would have to occur before the actual command is necessarily known.)