You can add cautious concern about older wiring in existing homes to the list of things that your home inspector needs to be focused on.
Despite the house building boom that's in progress, most people are still buying used homes. The National Association of Realtors doesn't like that term, preferring 'existing homes'. Regardless of the terminology, 5,540,000 previously-occupied (how's that for invention!) homes sold in 2016. New home construction added 563,000 homes, less than ten percent of the total.
With these older homes comes some interesting issues and the wiring is moving up the list for houses constructed during the Baby Boom (1946-1965-ish). Much of this wiring iscopper with a rubberized thermoset insulative cover with both the hot and neutral cloth-wrapped. Usually, there is no ground wire. For this article, I am focusing on the properties of the wire and won't be discussing the ungrounded nature of it. Another article, another time . . .
While this wiring has been remarkably stable, old-age is catching up to it. Specifically, the thermoset coating is beginning to fail. The rubbers are becoming brittle with time. This is most common in the houses built before 1960, but the Residential Electrical Systems Aging Research Project - Final Report was published in 2008, making even this data a decade old.
I periodically hire electricians, plumbers, and such to spend an hour with me, going over the trends that they see in their industries. I recently did this with Jess Izzo of Omega Electric in Pullman, Washington. I asked questions, Jess talked, and I ended up with a page full of notes to apply to home inspections.
According to Jess, the electricians are seeing a greater incidence of wiring failures. When they are called into a home to do even modest repairs or upgrades, they are noting cracked insulation on the wiring. The current fix for this is to re-wrap the wiring. Jess stated that he does this before he begins on the device replacement to limit the amount of deterioration that occurs.
From a home inspector perspective, this means I need to be aware of homeowners who may have installed new lights, receptacles, and devices without being aware of the fragility of the thermoset.
While this wiring is still serviceable and even though homeowners are permitted to perform their own repairs on their personal residence, my advice to home buyers will be to hire an electrician for any work that needs to be done. A receptacle replacement itself is reasonably easy, but the risk of causing unintended damage outweighs the ease.