I read Alas, Babylon by Pat Frank when I was in high school. I found it chilling because it took place a little south of where I live but my locale, including a local TV station, were mentioned. Apparently, we get nuked because of our nearness to MacDill Air Force Base. I was rather upset by this at the time but I still thought it was cool to have places I lived near mentioned in a book.
But the picture on the front pages of the first book is of my hometown, Durand, WI. It’s true!
Well, there’s not that many books set in Houston, so it was a pleasant surprise to see Johnny Truant in House of Leaves bsing about his days moping about the Ship Channel and performing activities of dubious legality.
As a kid, I remember reading a book called Escape from the Mushroom Planet set in Pacific Grove, CA, which is on the Monterey Peninsula. My parents bought a cottage there a year or two later and now live there. It’s the same place where the movie Turner and Hooch was set…
Why would they put a picture of Wisconsin in the front of a book set in MN? Weird. Just goes to show my hypothesis is true: While Minnesotans and Wisconsinites seem to think tere’s a big rivalry going on, to the rest of the country they’re the same state, basically. 
I first read One Flew Over the Cuckoo’s Nest when I was in high school, and was a bit shocked when i realized it was supposed to be set in the state hospital in Salem. That’s just about the only book I think I’ve read that was set locally. I have no idea if life inside the hospital is as described in the book, either.
Nick Earls’ Zigzag Street. He’s the same age as me and we moved in similar circles. It really was the first book which was authentically Brisbane of my era. I read while I was living in NZ and I was so homesick.
A rather mediocre novel Much Ado about Jessie Katz is set in my hometown. It’s more or less about the insanity that people turn their bar/bat mitzvah’s into (it’s a VERY jewish town). It’s pretty accurate.