Dumb question:
Do I need to be a local admin on my PC to create a database?

Not exactly. But you need SYSADM or SYSCTRL authority, which I think is given to the local Administrators group on Windows by default. If you create another group and assign it, say, SYSCTRL authority (UPDATE DBM CFG USING SYSCTRL_GROUP <group name>) then the members of that group will be able to create databases.