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In community research, longitudinal studies are still rare, and little is known about dynamic neighborhood change over time. As a natural experiment, the migration crisis of 2015/16 has led to a sudden yet uneven increase in ethnic diversity in many places in Germany. Ethnic diversity has been widely discussed as a detriment to neighborhood social capital, yet most evidence of this link remains cross-sectional. This paper looks at the development of collective efficacy and interethnic climate between 2014 and 2020 in a sample of 139 urban neighborhoods in Cologne and Essen (Germany), applying random effects within-between modelling of survey data (n = ca. 11,000). The longitudinal analyses show that while the between-neighborhood variation in social capital remained largely stable, an increase in ethnic diversity was associated with a significant but weak decrease in collective efficacy and interethnic climate. Cross-level interactions reveal that these effects were conditional on attitudes towards migration and other individual properties. The implications of these findings for research on neighborhood change are discussed.