I am working on Desktop application in WPF and creating SqlRepository with LocalDB to store data. I am using following tools
Diego's answer is correct.
This problem occurs when there is no connection string in project marked as startup project. Then EF tries to connect to some default database engine to perform update. In my case it tried to use express, and for some reason it couldn't connect. And the error was thrown.
Run your "update-database" with option "-Verbose". One of the lines there shows which StartUp project is used. Check your connection string in this project, or change the startup project to the one that has correct connection string. That solves the problem.