....no longer exists
It's been a magical 5 years, but it´s time for a change and the house is now closed and on the market to be sold as a "normal" house again
So unless you have around 70 million ISK to buy the place you will have to find somewhere else to stay
About other places, I haven´t tried them myself but these hostels look good too:
and these guesthouses are not too expensive and well located
Sorry you missed the boat on this one, but in a recent survey more than 90% of tourists in Iceland had a great experience in Reykjavík so I'm sure there were all staying in nice places
Have a great trip!