。
She lives right nearby.
Literal
She [topic-は] right-nearby [in-に] is-living.
そば ('side / nearby / by') is one of those richly multipurpose Japanese spatial words covering 'near, beside, next to'. すぐそば ('right nearby') uses すぐ as an intensifying prefix meaning 'immediately / directly' — same logical function as English 'right' in 'right next door'. 住んでいる is the resultative use of ~ている — 'be in the state of living', i.e., 'reside'. The に marks the location of residence (the standard particle with 住む).