So Close!!

I’ve been studying Japanese for about three years and I’ve been living in Japan for almost seven months now, and I feel like I’m sooo close to understanding what people are saying. If I take what someone’s saying in Japanese and slow it down or break it down and analyze it, I know and can understand most words and grammar points. But in normal conversations and media, this isn’t possible all the time. Between trying to analyze what was said and trying to come up with a response, communicating in Japanese well is still a challenge for me and as a result I feel like I sound not much better than a beginner. Same goes for anime and news, and with reading I can read about half of general stuff. I’ve read Genki I and II, and I’m halfway through Tobira. I’m also on Level 29 of WaniKani. I’ve used iTalki, and I try to go to language exchanges but they’re a bit far from where I live.

What am I missing? What can I do to bridge this final gap? My goal is just to be able to communicate with Japanese people and make friends, and be able to live in Japan smoothly.