I'm a landlord but here in PA, not CA. Here are some resources that you should read ASAP:
I would not sign the lease as it currently stands. If you do, and break it to buy a house then you will be stuck paying it until he finds another tenant or perhaps even be on the hook through the entire lease! Ouch! No thank you!
You can request language to be added in, to provide 60 days notice to break it but he may not agree. This would be best done in person over a cup of coffee and trying be really nice, etc. Something like, "We really love it here you have been such a great landlord (white lies) but we have been thinking about getting a home of our own so we WOULD be so happy to stay here AND pay you more but we need to also be able to provide you with 60 days notice - just in case we find the right place. How's that sound?
Legally, if you do not sign the lease, then you are simply still a M2M tenant. And unless he actually provides you with 30 days written notice, he can't ask you to leave OR verbally change the monthly rental amount. This must be done in writing and it sounds like he really didn't quite do this, but rather shoved a 2 year lease at you?
Bottom line, is that he can't force you to sign that lease and you should not do so as it currently stands. Unless he is stupid, he won't simply give you the 30 days notice, without first finding a new tenant. If you want to play hard ball, you can just wait until he provides you with PROPER written notice of his request for the additional money, and then toss it back - in writing - that you are willing to pay X. Things are not Agreed-to - until they are in writing. And, until he literally writes that he wants you out with a full 30 days notice ... you are protected.
I'd first try and meet with him, sugar him up, and be honest. If he's a jerk about it ... well - then you can just keep paying him what you have been or $300 more or whatever. And put in the MEMO line on your check "March Rent - paid in full". If he cashes that, then he is agreeing that that amount is proper. Be smart!
I hope this helps and wish you the best of luck!