When you choose where to stay in Reykjavik, you will find a diverse range of options. But you should try to spot one nice guesthouse like the Blue House, where I stayed. It sounds like a backpacker choice, but you’d be amazed how nice it can be to arrive in a house where you can cook, enjoy reading or just chat with people from around the world at breakfast. Kayak proved great for choosing this sort of location.
My choice included: a good chance to watch the northern lights, free parking, a beautiful room looking towards the Grotta lighthouse, a nice park behind and one of those great public hot spring swimming pools nearby. And, while it was outside the 101 Reykjavik area, bus number 11 could take me downtown in just 10 minutes.