Although public housing is often described as a negative and stigmatized environment, tenants living in such an environment can cultivate a positive sense of community, which enhances their individual and collective well-being. The present study describes the second phase of an action research, aiming to facilitate the empowerment of public housing tenants acting as peer-researchers. Following a Photovoice phase, this second phase focuses on the development and first implementation of a participatory observation method as a tool for evaluating tenants' collective environment fit. A group of nine tenants contributed to develop and later completed an observation grid. The observations were then discussed in decision-making sessions. The participatory observation method proved useful in supporting tenants in their reflection process, promoting the depiction of a nuanced portrait of their residential environment while also prioritizing capacity building. Results are currently used to inform an action phase in which tenants are taking increasingly more power. Triangulating the results from multiple sites is needed to establish more firmly the added-value of this observation method in a larger action research project. Key challenges and lessons learned are described in a reflective section, sharing experiential knowledge with researchers that consider using a similar method.