Local sad people found in address overlooking lake (8)

'local sad people' is the definition.
Although both the answer and definition are plural nouns, I cannot understand how one could define the other.

'address overlooking lake' is the wordplay.
I cannot really understand how this works, but
'lake' could be 'erie' (Lake Erie is one of the Canadian/US 'Great Lakes') and 'erie' is present in the answer.
The remaining letters 'miss' is a valid word which might be clued in a way I don't understand.
This may be the basis of clue (or it may be nonsense).

'found in' is the link.

Can you help me to learn more?