You're correct, I believe. It's very definitely local idiom. People don't really think about it if they've lived in an area all of their lives. So when speaking with newcomers, it isn't apparent to them that it would confuse direction-giving. Add that to "Oh, to get to the mall you turn right at the Smith's house" not "Oh, to get to the mall you turn right on Rt. 648". Who the heck are the Smiths?

It makes the words "think before you speak" applicable in more than just relationships.

"Adversity is the whetstone of creativity"