My wife and I having a baby 10/11 she wants a home water birth with my sister who is a midwife, I just think that's ridiculous are they even safe?

Home water births. This practice can be safe so don't panic. I am assuming your sister is experienced as a midwife AND familiar with water births. Water births can be a very rewarding experience but everyone needs to understand that if problems develop it transitions to a normal "dry" delivery and if needed transfer to a hospital. Another thought - can your sister live with herself if something goes wrong??
Basically safe. This has been around for decades with a crew of militant advocates, some horror stories, and little good science. If there's an emergency, it'll take extra time to get her to C-section. Baby may inhale water that's dirty from somebody's butt. However, your wife is always right. If your sister is an ethical midwife, she'll get help from an obstetrician if need be. Best wishes.
Ridiculous. I have had to run to resuscitate far too many dying newborns who were delivered under the best conditions to accept the cutesy narrative that these births are ever a good idea. I consider such women ignorant & naive. I refused to accept them into my practice since I considered their judgement so poor. Good luck, but I'm afraid your baby is at risk and there is not much you can do about it.
Depends on skill. Depends on the skill of the midwife. There are more & more births / deliveries at home these days (it seems to be fashionable trend) but most deliveries are still performed in a hospital. If pre-natal testing & your wife's history suggests that the birth will be uncomplicated, then only should you consider it; if there's any significant chance of complication, then have the delivery at hospital.