I was looking for a solution to this, too. I appreciate the code fix to the functions.php file, but I know this file will get overwritten if I update WooCommerce, so I try not to customize this file too much (it’s always wise to note what changes you make so you can add them back after updates).
To circumvent this, I chose Flat Rate as a shipping method (I suppose you could choose Free Shipping, too, but Flat Rate gives you the option to charge a fee if you want), set all costs to 0.00, and retitled it “Local Pickup”. I placed a test order just to be sure everything went smoothly. My solution works and my functions.php remains intact.
That said, if someone from the WooCommerce team thinks this isn’t a wise solution, I’d be curious as to why.
