Some of my users have been asking about a feature that would allow them to search members that live in the same town as they do, would this be possible to add to the search members page?

I think that's a good idea, under toggle more options add a "Location contains".

I agree, this is a good idea.

great idea
+1

Did anything ever come of this or am I missing it in 3.1.2? I have a member asking for this feature right now.