Well sort of. The custom for many, many years is to simply use $HOME as the prefix, and putting $HOME/bin in your $PATH. Avoiding those directories (and other stuff that was traditionally located directly in $HOME) was probably why the more recent "desktop environments" used $HOME/Desktop as their "top" directory for the GUI environment.
Later on, some people felt that all the configuration files in the home directory ($HOME/.rc and similar) was a mess, so the $HOME/.config was proposed as the "proper" location for configuration files. Of course, this just resulted in programs using both* directories, depending on when they were written.
Years later, in their usual over-engineered style, the freedesktop.org people later extended this idea into the XDG Base Directory Specification[1], which is where $HOME/.local enters the story. Of course, they don't actually specify it as a prefix suitable for use in "./configure --prefix=" (which would have made a lot more sense). The only define the share directory for use with XDG_DATA_HOME:
$XDG_DATA_HOME defines the base directory relative to which user specific
data files should be stored. If $XDG_DATA_HOME is either not set or empty,
a default equal to $HOME/.local/share should be used.
Of course, now you have to lookup the relevant environment variable and specify all the detailed directory options to autoconf if you want to actually support their spec, which probably looks something like
# pick one
PREFIX=$HOME
#PREFIX=$HOME/.local
./configure --prefix="${PREFIX}" \
--sysconfdir="${XDG_CONFIG_HOME:${HOME}/.config}" \
--localstatedir="${XDG_CACHE_HOME}:${HOME}/.cache}" \
--datarootdir="${XDG_DATA_HOME}:${HOME}/.local/share}"
XDG isn't a bad idea, but it's poorly specified and as that example shows, it can conflict with convention at times.
None of that makes $HOME/.local (or any other prefix) wrong - it's your homedir, you can organize it as you like. That's one of the nice features I really like about autoconf - it makes it very easy to install software anywhere you want, even unusual/non-standard locations.
[1] http://standards.freedesktop.org/basedir-spec/basedir-spec-l...