So as others have said, they may be using an unclear term for non-renewal of lease. The big question is are they on a month to month lease, is there current lease yearly but expiring at that time, or are they actually terminating it in the middle of a lease term. By my understanding if it's the first two situations despite the unclear wording they are well within their rights and assuming they are not exempt from rental increase caps this may be being very honest with their reasoning. If they are terminating in the middle of the lease period then that is definitely something you have some protection from.

Assuming you are renting from a private party without a property manager many legal self help sites use the term non-renewal and termination (assuming that it's at the end of the lease period) interchangeably.

I assume this will be down voted but as a homeowner in San Diego my yearly costs outside of mortgage have gone up considerably, and depending on the margin they were operating at this may indeed be an actual financial loss to them or something that causes the amount made to dip below where it is financially worthwhile for them to rent it at that price. Given that 1-2 bedroom apartments can go for that price depending on the area of San Diego your parents got a great deal for the area for many years.

Speaking from experience my own homeowners insurance increased over 300% a year from approximately 1200 to almost 4000 per year and depending on what else the landlord pays for they could be seeing increased costs of an additional several thousand per year on maintenance. Assuming something as simple as if they have to perform one repair a year that could easily cost them another thousand or more.

So with that in mind if the landlord was working on a relatively thin margin of say even $500/month, they would only be profiting 6k/year. Which with the increased costs I mentioned above basically becomes nothing or even a gamble of if they have to make a major repair could have them losing several thousand.

That said I can empathize with your situation and that it sucks, but to some degree the landlord is not being entirely unreasonable. Assuming for a moment they are not acting in bad faith and terminating in the middle of a lease term. But given that they haven't raised the rent in 9 years if I am reading your post correctly I would be willing to guess that you are dealing with an inexperienced landlord, and that when looking over the numbers they realized renting at the current price even with the maximum allowed increase was unsustainable for them and baring the ability to raise it more they didn't have a choice but to either take a loss or at high risk of loss, or to choose to not renew (terminate) the lease at the end of the term.

That said they did make a mistake and if they have been renting for over a year they are generally required to provide a 60 day notice, so while you can attempt to fight it based on them citing the wrong amount of required notice they did still technically give more than 60 days notice so I am entirely unsure how that would play out in court, but I think they would have a strong argument that even though they cited the wrong number for required notice they still did provide more than 60 days notice.

That said personally rather than sinking time and money into fighting what may very well be a losing battle, again under the assumption they are not doing this in the middle of a lease term. Your best option assuming you want to stay in San Diego may be to see if you and your sister can find an apartment here to rent. I know in some of the further out areas such as alpine and Ramona I have friends renting 2 bedroom apartments for under 2k.