That is really a very poor indicator and from your perspective it amounts to a gut instinct and that's piss poor mate.
There is too much information missing. For a start, do you know the volume on local bitcoin? Do you know how many sellers there are and how much stock they hold and are able to process?
During the bubble in which you were attempting to buy Bitcoins, vendors were pricing in potentials gains in the Bitcoin price to protect themselves from the upward swings, this is expected given Bitcoins volatility. If you sell 1 BTC for $500 and in 12hrs it's worth $600, well you've just missed out big time and given that there is delays in buying and exchanging Bitcoin it's fucking obvious that sellers will put a premium on.
Also we had a supply squeeze, people like you were desperately waiting days/weeks to get approved at an exchange which drove up the OTC prices which contributed to the premium.
So what's happening now? First we have had a very stable period and secondly demand has dropped massively. Both these things mean vendors are comfortable reducing their premium and also with demand dropping they are being forced to remain competitive.
I have traded on LocalBitcoins myself, indeed getting myself a slice of the 25%-30% action. I however charged a 'mere' 20% premium undercutting my nearest competitors massively. In this environment, I would do about 10K GBP worth of trade in about 20 minutes. Fkn hectic, but also highly lucrative. Then around the time of the double top, premiums reduced dramatically, but worthwhile doing nontheless. However, when I started undercutting the other vendors at what proved to be a tipping point in the market, I would find myself getting sabotaged by some glovepuppet account ordering 5K worth of btc, and then having 'bank problems' resulting in my coins being held up in Escrow for 48 hours or whatever, thus putting me out of action until the transaction was inevitably cancelled. This happened to me twice. Both times in a low premium environment, and both times preceding a brutal correction. Both times, I also felt compelled to liquidate Bitstamp btc positions in order to cover myself for worse case scenario as the price plummeted seemingly unabated. I haven't been arsed to trade there since.
I would suggest that there are LocalBitcoin whales who have been making a handsome living trading on that site for quite a long time, who are very astute at reading what is around the corner with regards to Bitcoin, as well as being not adverse to employing underhand tactics to deal with 'tiddlers' who are interfering with their business.
What the vendors are doing on LocalBitcoins is no concrete yardstick for what is actually going to happen, but I will also mention that during the recent run up from the $600 range, that premiums were 10%. Just another instance of the LocalBitcoin vendors calling the market correctly in advance.
